In its 2009 preliminary results statement, Tesco confirmed that it will develop a new range of products for launch by the end of the year subject to regulatory approval, including savings products and current accounts.
Tesco Bank, which rebranded from Tesco Personal Finance last October, will open new offices in Glasgow and Newcastle this summer dealing with banking and insurance services, and has plans to extend the trial of its in-store branch network of financial advisers.
However, while brokers believe the move will help increase consumer choice, there is concern that a direct service from Tesco will not give adequate financial advice.
Andrew Montlake, communications director of Coreco, said: “This news is a double-edged sword.
It will be good for consumers in regards to increasing competition, but generally the idea of Tesco going down the non-adviser route fills me with dread. The industry does not need more direct lenders that do not give advice. Mortgages should not be sold like vegetables. They should be sold as a product that needs careful advice.”
Jonathan Cornell, communications director for First Action Finance, added: “An increase in lending and consumer choice has got to help the market. There are too many major lenders that have too much market share without having to compete.
“However, there is the danger that people do not realise the scope of the service they are being offered. As long as they know that there is this limitation in place, there is nothing wrong with it.
But is Tesco going to do a fact find with its customers or give them a flow chart and let them pick the rate? The value of advice cannot be overstated.”
Tesco Bank made a pre-tax profit of £114m, down 40% on 2008 due to its acquisition in 2008 of the 50% stake held by the Royal Bank of Scotland. It grew its customer base by 400,000 to 6.2m across all its products.
