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Department for Business
Innovation & Skills
POST OFFICE BANKING
A consultation on developing
the banking and financial
services available at the
Post Office
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Post Office Banking
A consultation on developing the banking and financial services
available at the Post Office
The Post Office already offers a wide range of financial services. The Government
believes the time is right to expand the Post Office’s offer. There are three primary
reasons for this:
+ The recent turmoil in the financial markets has led many to call for a more local
provider of financial services — one which they trust and which has a branch close
to where they live.
+ The Post Office has a continued local presence at a time when other providers are
reducing their face-to-face contact with customers, so it is ideally placed to offer
essential financial services to everyone, including those who are financially
excluded.
- As the Post Office’s traditional sources of revenue decline, there is an opportunity
for financial services to be a real growth area for the Post Office which can help
sustain the network.
It is for these reasons that the Prime Minister announced on 29 September 2009: “I
want the Post Office to play a much bigger role, bringing banking services back to the
heart of people’s communities”.
This consultation sets out the Government's vision for banking at the Post Office and
seeks views on this vision and additional financial products and services the Post
Office could offer.
Issued: 2 December 2009
Respond by: 24 February 2010
Enquiries to: Sarah Barraclough
Post Office Banking Consultation
Shareholder Executive
Department for Business, Innovation and Skills
1 Victoria Street
London
SW1H OET
This consultation is relevant to all users of the Post Office; those who work for or on
behalf of the Post Office; and stakeholders with an interest in the Post Office, banking
and financial services, or financial inclusion.
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Contents
Foreword
Executive summary
How to respond
Part 1: Introduction
Part 2: The Government's commitment to the Post Office
Part 3: The Post Office's existing financial services
Part 4: Post Banks around the world
Part 5: The Government's vision for banking at the Post Office
Part 6: Expanding financial services at the Post Office
Part 7: What happens next?
Annex A: List of Post Office financial products and services
Annex B: List of consultation questions
Annex C: Consultation response form
Annex D: List of organisations receiving this consultation
Annex E: Code of Practice on Consultations
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Foreword by the Secretary of State
[to be finalised]
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Executive summary
1.
The Post Office is one of the most trusted institutions in the country. It has a
network of over 11,500 branches, offering face-to-face access to essential
services. The Government's primary policy aim for the Post Office is to maintain a
secure and sustainable network.
However, in recent years its traditional revenue streams have declined as more
and more people use the internet to access services. The exception to this is
financial services, where the Post Office has become one of the fastest-growing
providers. The Government believes that now is the right time to expand the Post
Office’s range of financial services products — to build on people's desire for a
local bank they trust; to ensure that essential financial services are placed in the
heart of communities; and to develop an important revenue stream for the Post
Office.
The Prime Minister announced this intention on 29 September 2009 when he said
that he wanted “the Post Office to play a much bigger role, bringing banking
services back to the heart of people’s communities.” The Government has
therefore launched this national public consultation to set out its vision for banking
at the Post Office and the sorts of products and services we would like it to
deliver.
Any new products will build on the Post Office’s already extensive range of
financial services. Many countries have a Post Bank. But it is often overlooked
that the Post Office provides a wide range of lending, saving, insurance, foreign
exchange and other financial services - just like Post Banks in other countries.
The Post Office is notable for its reach and range of financial services — providing
essential services that many other institutions do not.
The Government has set out the values that it believes should underpin any new
financial services that the Post Office provides. These values state that Post
Office banking should be Universal; Trusted; Accessible; and Sustainable.
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6. We want the Post Office to offer a range of new financial products that serve the
whole community — not just sections of it- at the same time as helping to sustain
the network by providing increased revenue for Post Offices.
7. Anumber of ideas have been put forward for financial services that the Post
Office could offer. Some of the suggestions being considered include: a weekly
budgeting account to help those on low incomes take advantage of direct debit
rates; a closer link between the Post Office and credit unions; and increasing
accessibility to other banks’ current accounts.
8. These are initial proposals. The primary purpose of this consultation is to ask if
people agree with the proposals being put forward and it focuses on the products
and services that people would like from their Post Office, rather than the
mechanism through which they will be delivered. By taking action to expand Post
Office banking, we will end up with a network that continues to serve local
communities, is more financially sustainable, and which offers an even wider
range of the products and services that people want.
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How to respond
9.
10.
11.
12.
13.
14.
This consultation opened on 2 December 2009. Responses are sought by 24
February 2010.
When responding please state whether you are responding as an individual or
representing the views of an organisation. If you are responding on behalf of an
organisation, please make it clear who the organisation represents by selecting
the appropriate interest group on the consultation response form and, where
applicable, how the views of members were assembled.
A copy of the consultation response form is included as Annex C, or available
electronically at www.bis.gov.uk/consultations. If you decide to respond this way,
the form can be submitted by post, fax or email to:
Sarah Barraclough
Post Office Banking Consultation
Shareholder Executive
Department of Business, Innovation and Skills
1 Victoria Street
London
SW1H OET
You can also reply to this consultation online at [insert link].
A list of the organisations to which we have sent this consultation is included as
Annex C. We would welcome suggestions of others who may wish to be involved
in this consultation process.
If you have any policy queries about this consultation, these should be addressed
in the first instance to Sarah Barraclough (contact details above).
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15. If you have concerns about the way in which this consultation is being managed or
conducted, please refer to Annex E which includes the Code of Practice for
Consultation and provides contact details for complaints.
Additional copies
16. This consultation is available electronically at www.bis.gov.uk/consultations, along
with the accompanying combined Impact Assessment and Equality Impact
Assessment. A Welsh translation of the consultation document is also available.
Additional hard copies can be ordered from:
BIS Publications Orderline
ADMAIL 528
London
SW1W 8YT
17. Where possible, we will make alternative formats available on request.
Confidentiality and data protection
18. Information provided in response to this consultation, including personal
information, may be subject to publication or release to other parties or to
disclosure in accordance with the access to information regimes (these are
primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act
1998 (DPA) and the Environmental Information Regulations (2004). If you want
information, including personal data that you provide to be treated as confidential,
please be aware that, under the FOIA, there is a statutory Code of Practice with
which public authorities must comply and which deals, amongst other things, with
obligations of confidentiality.
19. In view of this it would be helpful if you could explain to us why you regard the
information you have provided as confidential. If we receive a request for
disclosure of the information we will take full account of your explanation, but we
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cannot give an assurance that confidentiality can be maintained in all
circumstances. An automatic confidentiality disclaimer generated by your IT
system will not, of itself, be regarded as binding on the Department.
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Part 1: Introduction
1.1
1.2
1.3
1.4
1.5
The Post Office is amongst the most trusted institutions in the country. It has been
a feature of British life for well over three centuries, and stands at the heart of
local communities providing essential services and dependable products through
face-to-face contact.
Over the last five years, the Post Office has also turned itself into one of the
fastest-growing and most successful providers of everyday financial services. It
now offers an extensive range of banking products: from growth bonds to foreign
currency and from business banking to a Christmas Club. The Post Office prides
itself on making sure that its products are straightforward, offer good value, and
have no catches.
The Government believes the time is right to expand the Post Office’s offer. There
are three main reasons for this. First, the recent turmoil in the financial markets
has led many to call for a more local provider of financial services — one which
they trust and which has a branch close to where they live. Second, the Post
Office has a continued local presence at a time when other providers are reducing
their face-to-face contact with customers, so it is ideally placed to offer essential
financial services to everyone, including those who are financially excluded. And
third, as more and more of us use the internet leading to a decline in the Post
Office’s traditional sources of revenue, there is an opportunity for financial
services to be a real growth area.
It is for these reasons that the Prime Minister announced on 29 September that he
wanted “the Post Office to play a much bigger role, bringing banking services back
to the heart of people’s communities.”
The Government has taken forward this commitment by launching this national
public consultation on the future of Post Office banking. This consultation looks at
what the Post Office already does in the area of financial services, and where it
could go further. It sets out the Post Office’s existing extensive range of services
and explains how they can be accessed and where. It draws comparisons with
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Post Banks from around the world and asks what the UK can learn from these
examples.
1.6 Looking forward, this consultation sets out the Government's vision for Post Office
banking and the values that should underpin it. Finally, this consultation looks at
some of the ideas that have been proposed for the types of financial products and
services that the Post Office could offer , and asks respondents for their opinions
on these, as well as suggestions for new products that they would like to see
offered by their local Post Office.
1.7 This consultation focuses on the products and services that people would like
from their Post Office, rather than the mechanism through which they will be
delivered. The aim of this consultation is therefore to ask people what more they
want their Post Office to do in financial services. The end goal for this process is
clear - a Post Office that continues to serve local communities; offering an even
wider range of products and services that its customers want; and which is more
affordable and financially sustainable in the future.
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Part 2: The Government’s commitment to the Post Office
2.1 Before focussing on financial services, it is helpful to understand the
Government's commitment to the Post Office, and what we believe the Post Office
is there to do.
2.2 Post Office Ltd (the Post Office) is part of the group of companies owned by Royal
Mail Holdings plc, ultimately owned by Government. The Post Office is
responsible for managing network of branches whereas its parent Royal Mail
Group Ltd operates the letters and parcels business. The Government plays an
active shareholder role through the Shareholder Executive, and works closely
with Post Office management to develop overall strategy (including government
policy for the network). The Government is not, however, involved in the day to
day running of the company.
2.3 The Government is clear that the Post Office plays a vital social and economic
role in local communities right across the country. It does this by offering access
to essential products and services across its network of branches. That network is
substantial — comprising over 11,500 branches. To put that figure in context, it is
worth considering that the four largest supermarket chains combined have around
4,000 branches. 23 million of us visit a Post Office each week. Recent research
by the Postal Services Commission (Postcomm) estimated the value of the Post
Office network in social terms at upwards of £2.3 billion annually. But a network of
this size is also expensive to maintain.
2.4 Because we recognise that the Post Office’s great strength is its national spread
and local reach, the Government has put in place three commitments. First, we
are investing up to £1.7 billion until 2011 — which includes an annual subsidy of
£150 million a year — to help support the Post Office network.
2.5 Second, we have put in place guarantees to ensure that the Post Office stays
local - the Access Criteria (see Box 1) — which specify the maximum distance
which people should have to travel to their local Post Office, and include specific
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protections for the vulnerable. As a result nationally 93.3% of the population live
within one mile, and 99.7% of the population still live within three miles of their
nearest Post Office outlet.
2.6 And third, we have made it clear that we will continue to support the Post Office
network beyond 2011 and will not support any further programme of closures.
Together with the Post Office’s efficiency improvements and its development of
new products, the network is now on a more sustainable footing and we want to
build on that foundation.
2.7 But we should be in no doubt that real challenges remain. The internet enables
more and more of the services that people used to access face to face at their
local Post Office to be accessed online.
2.8 The Post Office is working hard to build new areas of business. Top of the list is
financial services. By building its financial services business, and with continued
Government support, the Post Office will help ensure that its most important asset
— the network — remains financially sustainable.
BOX 1 - THE ACCESS CRITERIA
Five access criteria apply at the national level:
1. 99% of the UK population to be within three miles of their nearest Post Office
outlet;
2. 90% of the population to be within one mile of their nearest Post Office outlet;
3. 99% of the total population in deprived urban areas across the UK to be within
one mile of their nearest Post Office outlet;
4. 95% of the total urban population across the UK to be within one mile of their
nearest Post Office outlet;
5. 95% of the total rural population across the UK to be within three miles of their
nearest Post Office outlet.
In addition, the following access criterion applies at a local level to ensure a minimum
level of access for customers living in remote rural areas:
+ 95% of the population of every postcode district to be within six miles of their
nearest Post Office outlet.
Part 3: The Post Office’s existing financial services
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3.1 Many people do not realise the extent of the Post Office's existing range of
financial services. Although the aim of this consultation is to ask what more the
Post Office could do in this area, we should first look at what it already does.
3.2 The Post Office is one of the fastest growing providers of financial services in the
UK. Although we usually associate the Post Office with letters, stamps, and
parcels, the Post Office gets around one third of its income from financial
services.
BOX 2 - FACTS ABOUT POST OFFICE BANKING
e Over 2 million people to date have used Post Office financial services to invest
their money, buy insurance, or use the Post Office credit card.
« The Post Office offers 1,900 free-to-use ATMs. It is forecast that 58 million
withdrawals totalling £3.5 billion will be transacted through the Post Office ATM
network in the current financial year.
e Around 200 million household bills are paid at Post Office branches every year
e The Post Office is the UK’s largest provider of foreign currency — it offers 72
currencies and transacts over £2.5 billion of foreign exchange every year.
e The Post Office is the biggest cash-handler in the country with over £80 billion
passing through the network each year. For every £1 in circulation, over 14p
goes through a Post Office branch.
3.3 The Post Office already offers a wider range of financial services than many
banks, covering many different needs and many different kinds of customers. For
example, if you want to invest savings, the Post Office offers both its own savings
accounts and National Savings and Investment products. If you’re going abroad,
the Post Office has been voted the best provider of foreign currency. If you want
to insure your car, your van, or your motorbike, then the Post Office has a range
of policies for you. If you just want to get cash, in addition to counter services at
branches, the Post Office has over 1,900 free to use cash points around the
country. If you're looking to buy a house, you may not know that the Post Office
also offers mortgages. For small businesses, the Post Office offers business
banking, insurance, and cash handling services. In fact, even if you don’t bank
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with the Post Office, in many cases you can still access your account at your local
Post Office.
3.4 The Post Office’s current range of financial services goes well beyond this. A
summary of its products is set out in Box 3. A detailed list of the Post Office’s
financial products, and how you can access them, is included as Annex A.
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BOX 3 - EXISTING POST OFFICE BANKING AND FINANCIAL SERVICES
PRODUCTS
Bills, Access, and Transfers
« Bill payment and prepayment for gas
cards, electricity keys, E-pay
transactions, water, phone, council rent
and insurance (depending on
agreements with relevant Local
Authorities and utility companies).
+ Current account access for 60% of other
banks’ current accounts
+ Basic bank account access for all banks
+ Moneygram for international transfers
+ Overseas property money transfers*
+ Postal Orders
+ Encashment of benefit payments,
including the POCA
+ Commission free currency and travellers
cheques**
+ Travel money card
+ Travel insurance **
Business Services
To make banking easy for businesses the
Post Office offers:
+ Post Office payout
+ Branch business banking services (in
conjunction with Alliance and Leicester)
for businesses with accounts with
Alliance and Leicester, Bank of Ireland
and Clydesdale
+ Cheque authority card
+ Cash collection service
+ Business insurance
Loans
The Post Office offers a range of credit
products provided by the Bank of Ireland:
+ Post Office Credit Card**
+ Post Office Personal Loans*
- Post Office Mortgages**
Insurance
The Post Office offers a competitive range
of insurance products (in conjunction with a
range of insurers):
+ Car insurance**
+ Home insurance**
+ Van insurance**
+ Motorcycle insurance**
+ Pet insurance*
+ Over 50s life cover**
+ _Life insurance**
Savings
The Post Office offers a wide range of
short and long term savings options.
Post Office products provided by the Bank
of Ireland:
+ Post Office Instant Saver
+ Post Office Cash ISA (variable)
+ Post Office Child Trust Fund
+ Post Office Fixed Rate Cash ISA
+ Post Office Growth Bond
+ Post Office Guaranteed Capital Bond**
- Post Office Guaranteed Capital Bond
(Cash ISA)**
+ Post Office Investment ISA
The Post Office also offers:
+ Saving stamps which can be used
against payment of bills, Post Office
transactions or as gifts
+ Christmas Club which allows you to
save for Post Office gift vouchers, which
can also be used in selected retail
stores
National Savings and Investments (NS&l)
also offers some products through the Post
Office:
+ NS&l Easy Access Savings Account
+ NS&l Investment Account
+ NS&l Income Bonds
+ NS&l Premium Bonds
+ NS&l Children’s Bonus Bond
+ NS&l Fixed Interest Savings Certificates
+ NS&l Index Linked Savings Certificates
Travel
When you're going abroad the Post Offices
offers:
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All products are available in branches, except
where marked. * denote online and/or
telephone only ** selected branches only.
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Question 1 —- What do you value about Post Office’s existing financial,
banking and payment services and what determines whether you use them?
3.5 We know that some people accessing a bank account difficult. Although the
Government has worked hard to reduce the number of people without a
transactional bank account, there are still approximately 1.5 million people who
don't have one.
3.6 We want everyone to have access to financial services appropriate to their
needs. Easy access means, in many cases, providing banking services
through local, trusted institutions which can help overcome barriers such as
geography, price and lack of trust. The Post Office has a range of products
specifically targeted at those on lower incomes or who prefer to save though
alternatives to bank accounts such as a Christmas Club and savings stamps.
Many people visit their local Post Office each week to access benefits through
their Post Office Card Account (POCA), and the Government action has
ensured that people can continue to access their POCAs at the Post Office —
see Box 4.
BOX 4 - THE POST OFFICE CARD ACCOUNT (POCA)
What people like about the POCA is its simplicity: it is a very simple account to
open and operate, and is essentially just a means of paying benefits and pensions
to those who are unable to, or choose not to, access mainstream banking for this
purpose.
It also helps to fulfil the Government's commitment that people can access their
pensions and benefits in person in cash at a post office branch, if they so wish.
Recognising the importance of the POCA as a source of income for the Post Office
and that Post Offices are often the only providers of financial services in remote
areas, the Secretary of State for Work and Pensions announced in November 2008
that the Government would award the Post Office a new contract for the POCA
until March 2015, with the possibility of an extension beyond that.
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Some modest enhancements to how the POCA works are already planned; for
example, from spring 2010 customers will also be able to withdraw their pensions
and benefits from their POCA at Post Office ATMs, as well as over Post Office
counters.
3.9 This section has set out the financial services the Post Office already offers..
The next question to consider is where it could go further. In this regard, there
are useful comparisons to be made with other post offices around the world.
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Part 4: Post Banks around the world
44
4.2
4.3
The idea of delivering banking services through post offices is not new. The
world’s very first “Post Bank” was actually founded in the UK — as the Post
Office Savings Bank in 1861. Many countries around the world now offer
financial services through post offices. This model is often known as a ‘Post
Bank’, although not all post offices are banks in their own right. Just as in the
UK, Post Offices abroad often have a large branch network and many existing
customers who welcome the convenience of being able to access financial
products and services at their local Post Office branch. Most Post Banks are
also seen to be different from more traditional banks in the countries where
they have proved popular. They emphasise that their branch network makes
them easily accessible (supplemented by other channels such as the internet
or phone where necessary); and they highlight the good value they offer, their
trusted status, and their high levels of customer service.
Not all Post Banks offer the same range of products and services. There is no
single model: this depends on what the customers in that particular country
want. The way in which they are organised also differs quite widely. Some are
fully-fledged banks in their own right (for example La Banque Postale in France
or Postbank in Germany); some are joint ventures with a bank (for example
Banque de la Poste/Bank van De Post in Belgium); and some act as
distributors for a separate bank’s products (for example Postbank in the
Netherlands sells ING products).
As an illustration of the kinds of services Post Banks offer, Boxes 5 and 6
provide details about the products and services two successful international
Post Banks offer, as these may illustrate where the Post Office could take its
banking services. With the exception of a current account, however, the overall
product range of these international Post Banks is very similar to the product
range of financial services that is offered currently by the Post Office.
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BOX 5 —- KIWIBANK (NEW ZEALAND)
4.4Kiwibank is a recent example of a postal services operator entering the financial
services market. It focuses on popular products and is positioned as a
consumer champion, as well as a ‘home-grown’ alternative aiming to end the
dominance of Australian banks within retail banking in New Zealand. Kiwibank
has a broad range of financial products:
Personal banking: home loans, personal loans, credit cards, everyday accounts,
savings accounts, investments and insurance.
Business banking: lending, cheque accounts, savings accounts, credit cards,
investments, merchant services and insurance.
International services: online and manual international money transfers, foreign
exchange and Foreign Currency Accounts and travellers’ cheques.
Banking services include internet, telephone and mobile banking, text message
and email alerts, online and email statements, and a nationwide network of ATMs.
BOX 6 - BANCOPOSTA (ITALY)
4.5The Italian Post Bank sources its various products from different suppliers and
markets them via its network as ‘simple, affordable and fair’. It offers the following
products:
Personal banking: loans, mortgages, current account, credit cards, rechargeable
card, investment funds, bonds, nnsurance, postal savings books and
certificates.
Business banking: business account, online account
International services: money orders, Moneygram, Eurogiro
Question 2 - Do the products or services offered by Post Banks around the
world provide any opportunities for the development of banking or
financial services at the Post Office in the UK?
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Part 5: The Government’s vision for banking at the Post Office
5.1 We have seen in Part 3 that the Post Office already offers a wide range of
financial services, and that it is unlike many other providers in that it caters to
all parts of society — including those who do not normally come into contact
with financial services institutions.
5.2 The Government is keen for the Post Office to expand its financial services
provision — both to ensure that people have access to essential financial
services and to help sustain the network. This will only be achieved if new
services are profitable for the Post Office and affordable for the taxpayer.
New vision
5.3 To bring back banking services to the heart of communities, the Government is
proposing a new vision for banking and financial services at the Post Office.
Our vision for Post Office Banking is based around four values:
e Universal: As the Prime Minister said, the Government wants the Post Office to
e Universal e Trusted
e Accessible e Sustainable
widen the range of banking services available in the heart of people's
communities. The Post Office is widely used by all sections of society and the
banking services it offers should reflect its diverse customer base. This means
ensuring that the Post Office offers a range of products that is attractive to
everyone in the community. The Post Office should offer services suited to
those on low incomes, the more vulnerable members of the community, and
those who may not be catered for by other businesses. Yet it should also offer
simple good-value products attractive across the community — in particular
those who are already users of banking services, though place a high value on
face-to-face services from an institution they trust and visit on a regular basis.
e Accessible: The Post Office’s greatest asset is its unrivalled network of
branches. This allows its customers to have face-to-face contact with their local
subpostmaster in over 11,500 branches in communities right across the country
(by contrast all banks combined have around 10,000 branches). The Post
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Office should not just be a virtual bank — its strength is that it is a real institution
with real branches and recognisable faces behind its counters. We therefore
want to make sure that all of the products that the Post Office offers are as
widely accessible as is feasible across the network (including Outreach’) as well
as being accessible online and over the telephone to increase customer choice.
e Trusted: The “Post Office” brand is strong. People view the Post Office as a
trusted and safe institution. We want the Post Office to continue to offer
products that live up to that strong brand and its responsible approach to
financial services. This means that the Post Office should not offer complicated
or risky products. It should focus on simple, transparent, good value products,
without catches.
e Sustainable: The Government's first priority for the Post Office is a sustainable
network that is also affordable. We want a strong, secure and sustainable future
for the Post Office network, supported by financial services which are
commercially viable for the Post Office and offer good value to consumers and
taxpayers.
Question 3 - do you agree that these are the right values for banking at the
Post Office?
‘ Post Office Outreach services are a way of providing Post Office services in communities where a
traditional Post Office is not viable or practical. These enable the Post Office to maintain a service in
smaller communities.
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Part 6: Expanding financial services at the Post Office
6.1 Although the Post Office’s financial services and banking offering is extensive,
it is not complete. We must identify those areas where the Post Office can
make a real difference, and determine what role the Post Office should play,
whether developing existing products and services or creating new ones.
6.2 We believe that the Post Office should build on its key strengths - its trusted
brand and the unrivalled face to face contact it offers across its extensive
network - and provide new products to make money in order to sustain the
network. But we also think the Post Office is for everyone, whatever their
income, and recognise the Post Office already plays an important role in
reaching out to those who are not well served by existing financial services and
institutions.
6.3 A range of suggestions have been put forward for securing the Post Office’s
future. These have come from many quarters — the Business and Enterprise
Select Committee, the Post Bank coalition as well as individual groups,
organisations, and private individuals. We want this consultation to help
determine whether the proposals outlined below are the right ones to pursue,
and whether there are other ideas that should be considered.
6.4 The ideas that the Government is considering can be grouped into three areas:
e Access
¢ Support
e Inclusion
Access: What makes the Post Office unique is its network of branches. The
Government provides substantial financial support to the Post Office to enable it to
maintain a nationwide network. Where it would be desirable to increase access to
particular banking services, the Post Office would be ideally placed to achieve this.
Currently, at least one basic bank account from each major bank is accessible
across the Post Office network. We have identified three proposals through which
the Post Office might improve access to banking services:
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e Post Office Current Account: The Post Office does not currently offer its own
current account. The introduction of a Post Office Current Account would enable
the Post Office to attract new customers and increase the number of customers
who use the Post Office day to day, potentially leading to greater revenue for the
branches and a more sustainable network. It could also help encourage greater
use of savings and other products by Post Office customers. The Post Office has
announced that it is actively developing a current account, which is expected to be
launched in 2010.
e Access to current accounts: There has been substantial progress on access to
other banks’ current accounts at Post Offices. However to do this, banks have to
agree a contract with the Post Office, meaning that it is ultimately a commercial
decision for the bank in question. Currently 60% of current accounts (around 25
million accounts) can be accessed at Post Office branches. This covers most - but
not all - of the high street banks. Progress can be made here. The Post Office is
working with those banks who do not offer access to their accounts to encourage
them to do so.
Access to credit union accounts: Credit unions provide an important service —
offering savings and small loans in local communities. Their popularity is growing,
with over 750,000 people using their services, and around £500 million in savings
invested in them. However, the strength of credit unions — the fact that they are
local — can also be a weakness, as it can be difficult to access accounts when
people are not in their local area. The Post Office has sought to address this
problem — and many credit union current accounts can be accessed right across
the Post Office network through the Co-operative Bank. However, it is more difficult
to ensure the same level of accessibility for credit union savings accounts because
local credit unions use a multiplicity of different IT systems. Again, the local nature
of the Post Office should make it the natural home for a service allowing credit
union savers to access their accounts across the country. This is an area which
merits further exploration. [Q — unsure of POL redraft of last point.]
Support: People trust the Post Office. They trust it to post their letters and parcels,
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to handle their pensions and benefits, to look after their savings and when they
interact with Government (for example getting driving licences). As the focal point
of many communities, it would also be a natural place for people to turn when they
need convenient access to financial services. Small businesses in particular rely
heavily on Post Offices, for example by taking advantage of the Post Office’s
business banking facilities at their local post office. The issue is whether the Post
Office can go further and act as a source for information and support on financial
issues.
- Business services: Small businesses particularly welcome the local accessibility
of Post Offices. The Post Office network is part of the national infrastructure for
small businesses and its products help the small business sector. Currently, the
Post Office offers to following banking services to businesses:
= Branch Business Banking — which allows customers to pay in cash and
cheques and withdraw cash
= Cash Collection services
= Cheque authority cards to assist cashless payment for business postal
purchases
= Post Office payout - a simple way of handling cash backs and refunds
to customers without writing cheques
= Cash transfers via Moneygram
The Post Office has also recently launched a range of business insurance products
which can be tailored to specific needs. It is also exploring other opportunities for
expanding the financial services it offers to small businesses.
Inclusion: The geographic coverage of the Post Office network, and the sheer
number and range of people who use it, make it ideally placed to put banking
services within easy reach of those who do not normally use or have difficulty
accessing them. The Post Office already offers a range of such products —
including the Christmas Club scheme, its Savings Stamps products, and access to
basic bank accounts. There are two new areas where the Government considers
the Post Office could play a useful role:
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e Savings: Because Post Offices are local and convenient, they are ideally placed
to encourage people to save. The Government announced in November 2008 that
it would offer the Saving Gateway scheme through the Post Office. This scheme is
a simple savings account that offers matched funding from Government to
encourage people who have low incomes to get into the habit of saving. In addition
to this, there is scope for the Post Office to offer a Children’s Savings Account, to
encourage children to develop a savings habit through their local Post Office.
e Weekly budgeting: Many low-income households do not take advantage of the
savings that can be made by paying for services by direct debit. Work by the
Government's Financial Inclusion Task Force indicates that this may be because
there is a mismatch between weekly or fortnightly income cycles on the one hand,
and monthly or quarterly direct debit billing cycles on the other. One way to tackle
this problem and to help households to manage their money with greater
confidence would be to offer a simple account that includes an automatic budgeting
function. Such an account could ring-fence a proportion of income each week, and
then pay bills by direct debit on a monthly or quarterly basis. This account would
support low-income households with budgeting, leading to reduced arrears, and
help save money through access to lower tariffs. It could also benefit utility and
other providers in enabling greater certainty of payments. A weekly-budgeting
account, could potentially also help people who have low incomes gain access to
basic home contents insurance, credit and low-value loans through providing
greater certainty of repayment for providers, resulting in increased willingness to
lend or to provide cover. Due to its location at the heart of communities, the Post
Office could be a natural home for such an account.
Question 4 — Do you think these are the right areas and products to focus
on?
Question 5 — What new financial services would you like to see available at
your local Post Office?
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Part 7: What happens next?
7.1 This consultation will close on 24 February 2010.
7.2 We will then analyse all the responses and expect to publish the Government
Response, accompanied by a revised Impact Assessment and Equality Impact
Assessment in, spring 2010.
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Annex A: List of Post Office financial products and services
Key: S - at selected branches. P- Print and post
Service Description of service Availability
Branch Call Web ATM
centre enabled
Receiving
Payments
Benefits / Pensions I Encashment of benefit payments, pensions and allowances by providing access to v * x *
/ Allowances bank and building society accounts, the Post Office Card Account, and
Payment encashment of DWP cheques.
Available at all branches.
Post Office Payout I This enables businesses to manage cashbacks and refunds without writing v x * x
cheques by using a barcode. A reference code is then sent by text, email or post to
the customers. The customers can take the reference to code to any Post Office
branch to receive the instant cash payment.
http://www. postoffice.co.uk/portal/po/jump2?catld=63000704&mediald=54 700711
Making Payments
Bill payments Acceptance of payment and pre-payment towards a variety of bills including gas v « x *
cards, electricity keys E-pay transactions, water, phone, council rent, mail order
and insurance (some schemes available on an area basis as agreed with Local
Authorities) Available at all branches.
http://www.postoffice.co.uk/portal/po/jump2?catld=86500737&mediald=20900329
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Service Description of service Channel availability
Branch Call Web ATM
centre enabled
Banking Services
Personal Banking Free cash withdrawals, cashing of personal cheques, cash deposits or cheque v x x v
deposits (the latter in most cases) for partner banks: Alliance & Leicester, Bank of
Ireland, Bank of Scotland, Barclays, Cahoot, Clydesdale Bank, Halifax, Lloyds
TSB, Nationwide, Northern Bank, The Co-Operative Bank and Smile. (See pages
39-40) for further details, including which basic accounts can also be accessed.)
These services are available at all Post Office branches. Cash can also be
withdrawn from the Post Office ATMs.
http://www. postoffice.co.uk/portal/po/jump2?catld=94800755&mediald=19400181
Business Banking Business banking services and the clients are: Alliance & Leicester, Bank of v x x v
Ireland, Clydesdale, HSBC (cheque deposit only in Scotland & Northern Ireland)
These services are available at all Post Office branches. Cash can also be
withdrawn from Post Office ATMs.
http://www. postoffice.co.uk/portal/po/jump2?catld=63000704&mediald=96300774
Cash Machines 1,925 free to use ATMs at branches. 673 ATMs are inside and 1,252 outside the v * * v
branch.
Money
Transmission
Moneygram International money transfer of up to £5,000 to over 190 countries. v * * *
http://www. postoffice.co.uk/portal/po/jump2?catld=86500737&mediald=96300777
Postal Orders Purchase or encashment. These can be obtained at any Post Office branch. v * * *
http://www. postoffice.co.uk/portal/po/jump2?catld=94800755&mediald=96200777
Overseas Property I To buy or sell property abroad, ot to make or receive regular international * v v *
money transfers payments. This service is available by phone or online.
http://www. postoffice.co.uk/portal/po/jump2?catld=86500737 &mediald=92800751
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Service Description of service Channel availability
Branch Call Web ATM
centre enabled
Savings
Post Office Instant I Instant access savings account. Instant access to funds at all branches, by phone, v v P v
Saver online, by post or at 60,000 Link ATMs. Six free Cash withdrawals per year. The
account can be opened at all branches.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=23200510
Post Office Cash Competitive interest rates, no withdrawal charges, tax-free, and easy access. Apply v x P x
ISA (Variable) by post, or at any branch. Payments can be made at any branch or by post.
Withdrawals can be made via post.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=95700767
National Savings Flexible savings, instant access, cash card for easy deposits and withdrawals, and v v v v
& Investments - tiered interest rates. Apply at any branch, by phone, or by post. Withdrawals can be
Easy Access made at any branch or Link cash machine
Savings Account _ I http:/Awww.postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=95800881
National Savings Easy access (no notice of penalty) passbook savings account with tiered Interest v v v x
& Investments - rates. Apply at any branch, by phone, online or by post. Withdrawals can be made by
Investment applying to NS&l.
Account http://www. postoffice.co.uk/portal/po/content1 ?catld=95800881 &mediald=72400733
National Savings Easy access (no notice or penalty), regular monthly income, competitive interest v v v x
& Investments - rates, and a higher rate of interest on investments of over £25,000. Apply at any
Income Bonds. branch, by phone, online, or by post.
http:/Avww. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=95800888
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Service Description of service Channel availability
Branch Call Web ATM
centre enabled
National Savings I All prizes tax free, two £1 million jackpots, and anyone 16 years old and above can v v v x
& Investments - invest. Apply at any branch, by phone, online, or by post.
Premium Bonds http://www.postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=105000805
National Savings I Tax free, anyone 16 years old and above can invest. Apply at any branch or by post. v * P x
& Investments — http://www.postoffice.co.uk/portal/po/content1 ?catld=9580097 1&mediald=19900196
Children’s Bonus
Bonds
Post Office Child I The Post Office Child Trust fund is designed to make of the £250 Child Trust Fund v x x x
Trust Fund voucher by investing in shares. Apply at any branch or by post.
http://www.postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=19400175
Post Office Fixed I Fixed term, fixed rate deposit account. Offers one, two and three year term lengths v x P x
Rate Cash ISA Apply at any branch or by post. Payments can be made at any branch or by post.
http://www.postoffice.co.uk/portal/po/content1 ?catld=19300232&mediald=105600780
Post Office Fixed Interest rates, no withdrawal charges, tax-free, and easy access. v v v *
Growth Bond Apply at any branch or by post. Payments can be made at any branch or by post.
Withdrawals can be made by post.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=19300235
Post Office Structured product offering three and five year term lengths with fixed interest rates. Ss * P *
Guaranteed Capital is guaranteed and returns are paid on maturity . Return is dependant on the
Capital Bond performance of the FTSE 100 index. Available in selected branches.
http://www.postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=96800761
Service I Description of service Channel availability
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Branch Call Web ATM
centre enabled
Post Office All prizes tax free, two £1 million jackpots, and anyone 16 years old and above can Ss x P x
Guaranteed invest. Apply at any branch, by phone, online, or by post.
Capital Bond - http://www. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=105000805
Cash ISA
Post Office Tax free, anyone 16 years old and above can invest. Apply at any branch or by post. v * P *
Investment ISA http://www. postoffice.co.uk/portal/po/jump2?catld=19300232&mediald=82300737
National Savings I Tax free fixed interest product with guaranteed returns. Anyone seven years old and v v v *
& Investments - above can invest. Apply at any branch, by post, by phone or online. Payments can be
Fixed Interest made at any branch or by post.
Savings http://www. postoffice.co.uk/portal/po/content1 ?catiId=95800883&mediald=72300721
Certificates
National Savings I Tax free fixed interest product. Anyone seven years old and above can invest. Apply v v v *
& Investments - at any branch, by post, by phone or online. Payments can be made at any branch or
Index Linked by post.
Savings http://www. postoffice.co.uk/portal/po/content1 ?catlId=95800883&mediald=72200721
Certificates
Savings stamps For use against payment of bills, Post Office transactions or as gifts. Buy and redeem v x x *
at all branches.
http://www.postoffice.co.uk/portal/po/jump2?catld=94800755&mediald=1 9400174
Christmas Club To save towards Post Office Gift Vouchers or use at selected retail stores. v * Print *
Customers are required to complete a simple application form which is taken to and
branch with an initial load (minimum £5). Customers can pay into this account at any bring
branch. to
http://www. postoffice.co.uk/portal/po/jump2?catld=94800755&mediald=68000708 branch
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Service Description of service Channel availability
Branch Call Web ATM
centre enabled
Insurance
Car Insurance Information is available in branches, but applications are only accepted at selected Ss v v x
branches, by phone and online.
http:/Awww. postoffice.co.uk/portal/po/jump2?catld=19300223&mediald=19300227
Home Insurance Information is available in branches, but applications are only acceptedat selected Ss v v *
branches, by phone and online.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300223&mediald=19300229
Van Insurance Information is available in branches, but applications are only acceptedat selected Ss v v x
branches, by phone and online.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300223&mediald=4 3100688
Motorcycle Information is available in branches, but applications are only acceptedat selected Ss v v *
Insurance branches, by phone and online.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300223&mediald=72900709
Pet Insurance Information is available in branches, but applications are only accepted by phone Leaflet v v x
and online. only
http:/www. postoffice.co.uk/portal/po/jump2?catld=19300223&mediald=67800708
Over 50's life cover I Applications accepted at all branches. [ v v v x
http://www. postoffice.co.uk/portal/po/jump2?catld=95400765&mediald=587 00696
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Channel availability
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Branch Call Web AT
centre enabled
Life Insurance Information is available in branches, but applications are only accepted in selected Ss v v *
branches, by phone and online.
http://www. postoffice.co.uk/portal/po/jump2?catld=95400765&mediald=6 1000695
Business Information is available in branches, but applications are only accepted in selected Limited v Limited *
Insurance branches, online by phone and online. policies policies
http://www. postoffice.co.uk/portal/po/jump1?catld=98200761 &mediald=107500769
Financial
Travel
Products
Bureau de A wide range of commission free currencies and American Express travellers cheques Ss v v *
Change 1655 branches offer a range of currencies on demand
An additional 2624 branches offer Euro and Dollars on demand
An additional 4480 offer Euros on demand
Currencies can be pre-ordered for collection at any branch
For those branches where this service is not available, the customers can order this
over the phone or online and it will be delivered to their local Post Office branch or home
address.
http://www.postoffice.co.uk/portal/po/content1 ?catlId=19300207 &mediald=19300210&int
campaignid=P10364
Travel Money A way of taking money abroad instead of travellers cheques. The card can be loaded v v v v
card from £50 to £2,500 at any branch.
http://www. postoffice.co.uk/portal/po/jump2?catld=19300207 &mediald=26800661
Mortgages.
Credit & Loans
Credit Card A range of Post Office credit cards are available. Information is available in branches, Ss v v v
but applications are only accepted at selected branches, by phone and online. [
http://www. postoffice.co.uk/portal/po/jump2?catld=19400177&mediald=34 100665
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Service Description of service Channel availability
Branch Call Web ATM
centre enabled
Mortgages Information is available in branches, but applications are only accepted at selected Ss v v *
branches, by phone and online.
http://www. postoffice.co.uk/portal/po/jump1 ?catlId=19300206&mediald=86600737
Personal Loans Post Office personal loan. Available online only. * * v x
http://www. postoffice.co.uk/portal/po/jump2?catld=19400177 &mediald=19400178
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Personal current accounts.
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Bank Cash Withdrawal Balance enquiry Cash deposit Cheque deposit
(with card and PIN) (with card and PIN) (with card or with (with personalised
personalised paying-in slip and
paying-in slip from your I deposit envelope from
bank) your bank)
Alliance & Leicester Yes Yes Yestt Yes
Bank of Ireland Yes Yes Yes Yes
Bank of Scotland Yes Yes No No
Barclays - in England and Wales Yest. No Yesttt Yes
Yes (with chequebook and
cahoot card) No Yesttt Yes
Clydesdale Bank Yes Yes Yes Yes
Halifax Yes Yes No No
Lloyds TSB - in England, Wales and Scotland Yest. Yes Yesttt Yes
Nationwide Building Society Yes Yes No No
Northern Bank Yes Yes No No
smile Yes Yes Yestt Yes
The Co-operative Bank Yes Yes Yestt Yes
Basic bank accounts
Abbey - Basic Account Yes Yes No No
Alliance & Leicester - Basic Cash Account Yes Yes Yestt Yes
Bank of Ireland - Basic Cash Account Yes Yes Yes Yes
Bank of Scotland - Easycash Yes Yes No No
Barclays - Cash Card Account Yes No No No
Clydesdale Bank - Readycash Account Yes Yes Yes Yes
First Trust Bank - Basic Bank Account Yes Yes No No
Halifax - Easycash Yes Yes No No
HSBC - Basic Bank Account Yes No No No
Lloyds TSB - Cash Account Yes Yes Yesttt Yes
Nationwide Building Society - FlexAccount (cash
card only) Yes Yes No No
NatWest - Step Account Yes Yes No No
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Bank Cash Withdrawal Balance enquiry Cash deposit Cheque deposit
(with card and PIN) (with card and PIN) (with card or with (with personalised
personalised paying-in slip and
paying-in slip from your deposit envelope from
bank) your bank)
Basic bank accounts
Northern Bank Yes Yes No No
The Co-operative Bank - Cashminder Yes Yes Yestt Yes
The Royal Bank of Scotland - Key Account Yes Yes No No
Ulster Bank - Basic Bank Account Yes Yes No No
Yorkshire Bank Yes Yes No No
T You can also withdraw cash from your personal current account using your chequebook and card. Card and PIN is quicker, easier and more
secure.
+t With card only.
+tt With personalised paying-in slip from your
bank
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Annex B: List of consultation questions
+ Question 1— What do you value about Post Office’s existing financial,
banking and payment services and what determines whether you use them?
+ Question 2 — Do the products or services offered by Post Banks around the
world provide any opportunities for the development of banking or financial
services at the Post Office in the UK?
+ Question 3 — Do you agree that these are the right values for banking at the
Post Office?
+ Question 4 — Do you think these are the right areas and products to focus
on?
+ Question 5 — What new financial services would you like to see available at
your local Post Office?
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Annex C: Consultation response form
You can also respond online to this consultation at [link toc] or download an
electronic version.of this form from. tn tbc] and email it to
postofficebanking (e)
The Department may, in accordance with the Code of Practice on Access to
Government Information, make available, on public request, individual responses.
The closing date for this consultation is 23/02/2010.
Your name:
Your organisation (if applicable):
Your Address:
Please tick the box that best describes your organisation (if applicable):
Business representative organisation/trade body
Central government
Charity or social enterprise
Individual
Large business ( over 250 staff)
Legal representative
Local Government
Medium business (50 to 250 staff)
Micro business (up to 9 staff)
Small business (10 to 49 staff)
Trade union or staff association
Other (please describe):
Thank you for taking the time to let us have your views. We do not intend to
acknowledge receipt of individual responses unless you tick the box below.
Please acknowledge this reply 0
At BIS we carry out our research on many different topics and consultations. As
your views are valuable to us, please tick the box if you are willing for us to contact
you in future either for research or with consultation documents.
0 Yes 0 No
Question 1 — What do you value about Post Office’s existing financial, banking and
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payment services and what determines whether you use them?
Question 2 — Do the products or services offered by post banks around the world
provide any opportunities for the development of banking or financial services at
the Post Office in the UK?
Question 3 —Do you agree that these are the right aims for banking at the Post
Office?
Question 4 — Do you think these are the right areas and products to focus on?
Question 5 — What new financial services would you like to see available at your
local Post Office?
Please continue on further sheets if necessary and return completed forms to:
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Sarah Barraclough
Post Office Banking Consultation
Shareholder Executive
Department for Business, Innovation and Skills
1 Victoria Street
London
SW1H OET.
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Annex D: List of organisations receiving this consultation
Action with Communities in Rural England
Age Concern/Help the Aged England
Age Concern and Help the Aged in Scotland
Age Concern Cymru/Help the Aged in Wales
Age Concern Help the Aged Northern Ireland
All Party Parliamentary Group on Post Offices
All Party Parliamentary Group on Poverty
All Party Parliamentary Group on Rural Services
Association of British Insurers
Association of Convenience Stores
Association of British Credit Unions Limited
Association of Local Authorities of Northern Ireland
Association for the Protection of Rural Scotland
British Bankers Association
British Chambers of Commerce
British Pensioners and Trade Unions Action Association
British Retail Consortium
Building Societies Association
Business in the Community
Business Innovation and Skills Select Committee (clerk or chair?)
Campaign for Community Banking Services
Campaign for the Protection of the Countryside Northern Ireland
Campaign for the Protection of Rural Wales
Campaign to Protect Rural England
CBI
CBI Cymru/Wales
CBI Northern Ireland
CBI Scotland
Centre for Environment and Rural Affairs
Chamber of Wales
Child Poverty Action Group
Citizens Advice
Citizens Advice Northern Ireland
Citizens Advice Scotland
Citizens Advice Wales
Commission for Rural Communities
Committee of Scottish Clearing Banks
Communication Workers’ Union
Community Development Finance Association
Competition Commission
Consumer Focus
Consumer Focus Post (North Ireland)
Consumer Focus Scotland
Consumer Focus Wales
Convention of Scottish Local Authorities
Co-operatives UK limited
Council of Mortgage Lenders
Council for the Protection of Rural England
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Countryside Alliance
Disability Wales
Enterprise UK (Village Retail Services Association)
Equality Commission for Northern Ireland (for Disability)
Equality and Human Rights Commission
Family Action
Fawcett Society
Federation of Rural Community Councils
Federation of Small Businesses
Forum of Private Business
Fuel Poverty Advisory Group
Joseph Rowntree Association
Local Government Association
Mencap
Mind
Money Advice Trust
Money Liaison Scotland
Mothers Union
National Assembly of Wales
National Association of Local Councils
NCH (National Care Homes)
National Council for Voluntary Organisations
National Federation of SubPostmasters
National Federation of Women’s Institutes
National Pensioners’ Convention
National Society for the Prevention of Cruelty to Children
new economics foundation
Northern Ireland Assembly
Northern Ireland Chamber of Commerce and Industry
Northern Ireland Executive
Office for Disability Issues (DWP)
Office for Equalities
Office of Fair Trading
Office of the First Minister and Deputy First Minister, Northern Ireland
One Parent Families
Parish Councils and Residents Association
Payment Council
Plunkett Foundation
Policis
Post Bank Coalition
Postcomm
RADAR (Royal Association for Disability and Rehabilitation)
Regional Development Agencies
Rethink
RNIB
RNID
Royal Association for Disability Rights
Royal British Legion
Runnymede Trust
Rural Shops Alliance
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Social Enterprise Coalition
Scope
Scottish Assembly
Scottish Chambers of Commerce
Scottish Disability Forum
Scottish Government
Shelter
Townswomen’s Guild
Toynbee Hall/Transact
Trades Union Congress
Unite
University of Bristol Personal Finance Research Centre
Welsh Assembly Government
Welsh Language Board
Welsh Local Government Association
Which?
Women’s National Commission
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BEISO001171
RESTRICTED — POLICY AND COMMERCIAL
DRAFT
Annex E: Code of Practice on Consultations
1. Formal consultation should take place at a stage when there is scope to
influence policy outcome.
2. Consultation should normally last for at least 12 weeks with consideration
given to longer timescales where feasible and sensible.
3. Consultation documents should be clear about the consultation process,
what is being proposed, the scope to influence and the expected costs and
benefits of the proposals.
4. Consultation exercise should be designed to be accessible to, and clearly
targeted at, those people the exercise is intended to reach.
5. Keeping the burden of consultation to a minimum is essential if consultations
are to be effective and if consultees’ buy-in to the process is to be obtained.
6. Consultation responses should be analysed carefully and clear feedback
should be provided to participants following the consultation.
7. Officials running consultations should seek guidance in how to run an
effective consultation exercise and share what they have learned from the
experience.
Comments or complaints
If you wish to comment on the conduct of this consultation or make a complaint
about the way this consultation has been conducted, please write to:
Tunde Idowu,
BIS Consultation Co-ordinator,
1 Victoria Street,
London
SW1H OET
Telephone
or e-mail t
45