Why it’s high time to move banks

published 26 July 2012

The last week has been all about current accounts. First the Co-op announced a deal in which it has bought 632 branches from Lloyds. That's nice for the Co-op (it got the lot for a mere £750m, or about half the branches' book value). It might also be nice for the consumers who are to be moved over (by the end of next year some time). The Co-op is still a mutual and, presumably as a result, has very high customer satisfaction ratings (it usually comes second to First Direct).

However, as my colleague Phil Oakley pointed out, it probably won't make much difference to the high street as a whole. Why? "Scour the best-buy tables and you'll struggle to find the Co-op listed." It might have polite call centre staff, but its interest rates and current accounts don't offer much its new customers don't already get from the much-loathed Lloyds.

With that in mind, I'm more interested in the new current account launch from Marks & Spencer. It isn't a free account. You can pay either £15 or £20 a month, in return for which you get afee-free overdraft (with no interest on the first £100), exclusive access to a 6% savings account in which you can deposit a maximum of £250 a month, and a variety of benefits. Pretty much all financial journalists have pronounced it to be dreadful. Ruth Jackson, writing in MoneyWise, sums up the general feeling: her view is that the account shows M&S "jumping on the profit bandwagon" that is packaged accounts, "along with the high-street banks". I'm not sure that's entirely fair.

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Take the £15 account: it costs £180 a year, but you get 48 hot drink vouchers (value £127), a birthday gift (£10), more vouchers (£85), and if you use an M&S debit card when you shop, even more vouchers. If you sign up now you'll also get some extra 20%-off vouchers. That adds up to a minimum of £222. Clearly, if you don't love M&S, this isn't the account for you. But if you shop there all the time anyway and quite like coffees out, it surely is.

The real point, however and the reason to be pleased with a launch from the likes of M&S is that competition is finally emerging in the British market, and we almost have an obligation to take advantage of that. Just as you rather lose your right to stand around complaining about the government if you can't be bothered to make democracy work by voting, so you rather lose your right to complain about the banks if you can't be bothered to make competitive capitalism work by moving your account. So get on with it.

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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.