High street retailer Marks and Spencer (M&S) has introduced two current accounts with a setting up charge of £20 and £15 respectively, it has been announced today.
Customers must pay £20 a month for a Premium Current Account providing insurance and £15 for the same account without the added bonus of protection cover included in the payment.
Working in partnership with HSBC, the retailer will be the first fee paying rather than free bank account in the UK.
HSBC has come under fire this week over claims that it aided money laundering activities for clients affiliated to Mexican drug gangs as well as other organisations including al-Qaeda, and last night its Chief Compliance Officer David Bagley resigned from his post.
M&S promises numerous benefits as part of its new service, including an automatic £500 overdraft with the first £100 interest free and access to a savings account with a fixed rate of 6.00 per cent AER/gross.
Colin Kersley, CEO of M&S Bank says that even though there is a charge to set up an account initially there are no hidden payouts down the line.
“With over 25 years in personal finance, our loyal customers trust us to deliver the products and services that are right for them,” he said.
“A current account is the natural next step and we have designed this product with our customers in mind – combining the exclusive M&S benefits they love, with a transparent account structure that has no hidden fees.”
Customers will need to register for an account ahead of the official launch of these services in October.
Despite assertions from the retailer that the new accounts provide transparency, the Financial Services Authority has recently investigated new fashioned accounts with added costs and is worried that consumers are spending unnecessarily on services they do not utilise.
Neil Saunders, Managing Director at analyst group Conlumino, believes that it could be a risk for customers to switch accounts to a newly launched service.
He told Retail Gazette: “While it’s not unusual for premium current accounts to levy an annual charge, it’s a risky strategy for a new entrant as it restricts the pool of potential customers.
“Getting customers to change bank accounts has always been notoriously difficult and charges may well act as a further barrier to switching.
“That said, the M&S account does have some interesting features and added value benefits which will be of interest to loyal M&S shoppers.
“In this sense, there is some differentiation from other accounts already out there.”
Boyes-Weston will replace Buying and Design Director Helen Low and a spokesperson today confirmed that Low will join George at Asda following her departure.
“Helen Low has decided to leave M&S; she leaves with our thanks and very best wishes for the future,” the spokesperson added.