TSB: Why is Europe telling us to switch banks?

TSB: Why is Europe telling us to switch banks?

Elsewhere, the “new” bank’s rebranding and current advertising blitz, at a cost of £30m, are angering others. “I would be far more impressed if they used these resources to give their customers a decent interest rate” was one remark. Others are discovering more practical objections to the changes foisted on them, which are only just becoming apparent and will probably take as long as a year to really show.

The most obvious of these is the availability of the new TSB branches to customers who formerly used their Lloyds branch. In total 631 branches are being hived off Lloyds’ total of 1,931 to form the new TSB entity. For the foreseeable future (that means months, rather than years) TSB customers will be able to carry on using Lloyds branches. But when the banks finally part ways the two will become truly separate banks.

So, for example, cheques paid into a TSB account from a Lloyds one will take longer to clear. So might credit card payments. Direct debits to savings accounts set up when Lloyds TSB was a single outfit could be disrupted. Services at Lloyds cash machines, such as balance checking, won’t be available on some new TSB cards when these are issued.

There will be customers whose previous accounts were all with one bank but who now find they are split between two. You might, for example, have a joint account with your spouse and a separate account of your own, with payments passing frequently between the two. One account could stay and one go – with all the potential inconvenience that entails. And so on.

TSB insists the spread of branches is adequate. It says 46pc of customers will be within two miles of a newly decked-out TSB branch. Even after the split the remaining Lloyds customers will have better access, with 68pc being within two miles of a branch.

To give these figures some context, when the Government laid out the future financing of the post office network in 2010, it said the country’s 11,500 post offices meant 93pc of the population lived within a mile of their nearest branch. By comparison TSB branches are going to be exceedingly thin on the ground.

And none of this, by the way, yet touches on the likely annoyance caused to remaining Lloyds customers who discover that their nearest branch is switching to TSB.

Derek French (see the report opposite) is Britain’s leading independent authority on bank branch distribution. By his analysis TSB’s new 631-strong network, which includes a hotchpotch of former Cheltenham & Gloucester mortgage shops, is tilted too much to the north. He reckons four in five of the branches are in the Midlands, North, Scotland or Wales – leaving a vast gap in populous southern regions outside London (which will have about 30). “As a stand-alone branch network TSB just isn’t viable,” Mr French said.

One result is certain, which is that TSB is going to want its customers to make more use of “remote” services such as online and telephone banking.

This is a trend that all banks are keen to encourage as it cuts the cost of staff and premises. One unwelcome upshot of the Lloyds split would be if it accelerated the general drift away from the provision of branch-based banking services, with all the benefits these bring to certain groups of customers such as small businesses, carers and others.

It is difficult to know how this unique carve-up will evolve. Of course, there have been brand upheavals in the past: building societies have converted to banks, and banks have bought other banks, and all of these changes have involved a certain amount of customer disruption. But never before have so many customers been given the shove by a remaining bank, and arbitrarily cast into a new one. TSB says only 4,000 customers are so far insisting on remaining with Lloyds. I wonder whether this number will swell as real inconveniences become clear.

Despite everything banks have done to destroy their customers’ faith in them, and Lloyds is as bad as any, many people value the familiarity of their bank’s brand. They would rather stick with the devil they know.

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