Reed Lobbies Ministers Over Post Office Card Accounts for Pensioners

Please click the above image (and then use the enlarge tool in the bottom right hand corner of the image) to read full size version.

Or read text of the letter below.

Dear Andy,

Thank you for your recent letter of 9 March to John Hutton about the Post Office card account.

There has been a great deal of misleading coverage of this issue in the media recently. It might be helpful if I clarify the position.

The Post Office card account contract rund up to 2010. There was never any expectation that we should provide funding beyond that date and there is no case for doing so. People will still be able to collect their benefit or pension at the Post Office if they wish by using a bank or building society account there. Around 25 or so different accounts are accessible through Post Offices.

The Post Office card account was introduced in April 2003 to help support the conversion of some customers from order books to Direct Payment and has helped them get used to the basics of banking. It was aimed at those who did not already have a suitable account. It was designed as a stepping stone to help people who had not used a bank account before get used to banking before moving on to an account offering more features.

In line with our wider policy on financial inclusion, we have always made it clear that payment into a bank or building society is the best option for the overwhelming makority of customers. The Post Office card account is a simple account with limited functions. It can only receive payments of benefits, pensions and tax credits. For example, the Post Office card account does not allow customers to make savings on fuel bills by paying by direct debit; it cannot receive payment of wages; cheques cannot be paid in; and the account does not pay interest on balances.

Although the Post Office card account was designed for those who did not already have a bank or building society account, 70% of people who have opened one already have such an account. The remaining 30% have shown that by managing to open and operate a Post Office card account, they can use other easy-to-operate banking products, including basic bank accounts, which are widely available and accessible at Post Office branches. In practise, there is no real difference in accessing money at the Post Officevia a bank account compared to a Post Office card account. Customers can collect the same money, on the same day as they do now at the Post Office, by using a plastic card and personal identification number.

We would like every customer who currently has a Post Office card account to do their banking at the Post Office if that is in their best interests. We can help people move off Post Office card accounts to having their benefit or pension paid into more suitable bank or building society accounts, and help them open new ones that can be used at the Post Office if necessary. Of course, our priority will be to ensure that this is a straightforward process for the customers themselves.

Yours sincerely,

James Plaskitt MP
Parliamentary Under Secretary of State