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Post Office Card Account

Volume 684: debated on Thursday 20 July 2006

My honourable friend the Parliamentary Under-Secretary of State for Work and Pensions (James Plaskitt) has made the following Statement.

The Department for Work and Pensions ran a number of small-scale Post Office card account pilots between 13 February and 10 March 2006. The pilots tested various approaches to moving people, from having their benefit or pension paid into a Post Office card account to payments into a bank account, and they have provided us with some useful information on how customers react.

We have already shared the key findings with Post Office Ltd to help it identify customer needs as they develop new savings and banking products which are likely to be more attractive to many of their customers than the current Post Office card account. Post Office Ltd plans to start a three-month trial next week when it will be writing to 10,000 existing Post Office card account customers to encourage them to open one of its new Instant Saver accounts.

Among the key findings from the DWP pilots were:

many customers were not aware that they could use their bank account at the Post Office. This is not just an issue for those receiving a benefit or pension. There are around 20 million people who could access their bank account at a Post Office, but only around 10 per cent (2 million) per week actually do so. This is a huge untapped market which could bring vital new income into Post Office branches. DWP will work with Post Office Ltd and support it in its efforts to increase this market;

once customers had moved from the Post Office card account and become used to their new routine, the vast majority (85 per cent) were happy using a bank account rather than a Post Office card account. Customers like the additional features of bank accounts and the flexibility to get their money when and where they want; and

there are opportunities for Post Office Ltd to respond positively to customer demand by providing new products which offer more features than the Post Office card account. Customers need to be properly informed of all of their options and the services that the Post Office offers.

We will continue to discuss with Post Office Ltd and other key stakeholders how the needs of customers can continue to be met after the Post Office card account contract ends in 2010. DWP officials will also be discussing the findings from the pilots and our future payments strategy with customer representative groups and other key stakeholders over the next few months.

Our commitment to allowing people to continue to collect their benefit or pension in cash at the Post Office if they wish remains unchanged. Around 25 different bank accounts can be accessed at Post Office branches now, and we hope there could be more in the future, as well as new Post Office products.

I am placing a report of the pilot findings in the Library of the House.