Why I think M&S’s bank account is a let down

M&S launched itself into the bank account market with great enthusiasm in July. Although I was away on holiday on the day of the big announcement, I returned to find they’d couriered the press release along with three packs of M&S ‘phizzy pig’ sweets and a porcelain pig money box. Clearly they were very excited.

Here at Which? we’ve been eagerly anticipating the entrance of some fresh brands in the banking market for several years, hoping that these challengers can help shake up the existing stale competition.

But while M&S’s zeal can’t be faulted, its new bank accounts don’t leave much for customers to get excited about – and seem unlikely to tempt any but the most loyal M&S shoppers to switch from their existing providers.

M&S charges for accounts upfront

The interesting move that M&S has made is to only offer accounts which charge an explicit fee. It’s launching two fee-charging accounts – one that will set you back a not-insubstantial £15 a month, and one that, at £20 a month, will be the third most expensive current account on the market.

The largest single benefit of the cheaper account is a pack of 48 hot drink vouchers for use at the M&S café, reportedly worth up to £127 a year. Meanwhile, the other £210 of claimed value is made up mostly of other M&S vouchers and loyalty points – as well as access to a 6% regular savings account.

Although this package of benefits may hold some allure for the minority of people who have an obsession with M&S – and who do all their coffee drinking, food shopping and clothes shopping there – the vast majority of people who venture into M&S are unlikely to be attracted by such a weak cocktail of rewards.

Are M&S account extras worth it?

We’ve written before that people are more likely to change their partner than their bank account, and given that top-class banks will pay you a cold hard £100 to switch and won’t charge a monthly fee when you arrive, M&S looks a long way off the money.

Though M&S are offering 12 additional shopping vouchers for new customers, these can’t be used on food shopping, and most people are unlikely to be able to extract the maximum £600 of value out of them.

M&S’ more expensive £20-a-month account does at least come with comprehensive family travel insurance, which M&S claims is worth up to £245 a year. But given you can buy a Which? Best Buy worldwide annual family policy for under £60 I struggle to see how M&S believes its policy to be worth anything like its claim. It’s true that its cover limits are higher than the average policy, but it’s possible to buy a policy with equivalent levels of cover for much less than £245.

As far as bank charges, interest rates and all the small print goes, we simply don’t know whether M&S will be competitive. These details are not yet included on its site, even though customers are being encouraged to pre-register for their new packages now.

For a brand with such heritage and respect, M&S’s launch into the current account market is thoroughly disappointing. Tesco has said that it finally plans to launch its own account in 2013. Let’s hope it comes up with something more impressive.