Tesco Bank pulls out of current accounts sector
The bank is reorganising its product range (pic: Terry Murden)
Tesco Bank has announced a further rolling back of its range of services with the closure of its personal current account.
It had been closed to new business in December 2019 and will now also close for existing customers at the end of November.
Pulling out of current accounts represents another reversal of the expansion of the bank under former CEO Benny Higgins who launched them in 2014 as the bank edged towards becoming a full service bank.
Within months he was saying that current accounts could grow to be as big as Tesco’s credit card business which at the time were being used in one in eight credit card transactions in Britain.
There are currently c.213,000 current accounts open but it is estimated that only 12% are being used by customers as their primary current account.
Most accounts have limited activity or are being used for other purposes, such as a savings pot.
Mr Higgins also led the bank into mortgages, but the portfolio was sold in 2019 to Lloyds Banking Group in a £3.8 billion deal.
Tesco Bank will now write to current account customers to inform them of the closure of their account and to explain the options available. Customers will receive their letter in the next two weeks.
These options include:
- Moving to a new current account provider via the current account switching service (CASS)
- Moving their balance to a Tesco Bank savings account
- Registering for Tesco Clubcard Pay (a new product from Tesco Bank currently in test with a panel of Tesco shoppers and colleagues)
- Applying for one of Tesco Bank’s range of credit cards.
- Customers can find more details on which product might be right for them at tescobank.com/current-accounts/
Tesco Bank will provide customers with any support needed during the process of closing or switching their account by the 30 November deadline.
Customers can use the Current Account Switch Service at www.currentaccountswitch.co.uk to switch their banking to another current account provider. This is a guaranteed free service and the switch can be done within seven days.
Customers who choose not to switch to a new current account have been asked to move any regular incoming or outgoing payments to a different account, and to make sure their account has a zero balance by Tuesday 30 November 2021.
Tesco Bank serves more than five million customers across a range of banking and insurance products, down from 7.2m in 2015. The closure of the current account supports Tesco Bank’s strategy of focusing on products and services that best meet the needs of Tesco shoppers, helping them to manage their money a little better every day.
Gerry Mallon, chief executive, said: “The way customers shop and manage their money is constantly evolving and we are committed to developing products and services which align with the needs of Tesco shoppers.
“With so few of our current account customers using it as their primary account we want to support them to find a suitable alternative dependent on their circumstances. We will pay particular attention to supporting any vulnerable customers and those in need of financial assistance.
“Customers who have been using our Current Account as a savings pot may be better suited to one of our tailored savings products.
“And shoppers who are looking for a payment option which allows them to continue collecting Clubcard points in and out of Tesco may want to consider Tesco Clubcard Pay or a Tesco Bank credit card.”
Tesco Bank offers credit cards, money services for Tesco shoppers, highly rated insurance and loan products, and savings products with a strong emphasis on value, helpful benefits and rewarding loyalty.