Tesco Bank’s announcement that it is to get into the mortgage providing game before the years end as part of a plan to introduce a regular retail banking service for its customers has met with a very mixed response from brokers.
The plan set out in Tesco’s 2009 announcement calls for a rebranding of the more store card oriented Tesco Personal Finance, into the new Tesco Bank, which took place at the end of last year. The next stage will see the opening of Newcastle and Glasgow offices, which will sell insurance services and offer banking, and of course there are plans for a huge in-store network of bank branches at the supermarkets.
Brokers are concerned that staff at Tesco stores will not be able to give quality financial advice, although they admit that a massive increase in choice for banking consumers will be a big advantage to the banking public.
As in many businesses it is believed that added competition, especially from a company with the financial clout of Tesco, will liven up the high Street banking business. But the brokers also say that the market for mortgages is already saturated, and additionally they cannot be marketed in the same way that Tesco markets fruit and veg.
There is also a feeling among brokers that this new added competition could eventually lead to a lack of competition that could occur if Tesco were to get anywhere near as big in the banking business as they are in the baked bean business.
Brokers also believe that Tesco offering banking and mortgage services could be a big boost to the market, as long as potential customers realise that they may be getting only relatively basic advice.
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