M&S cheap loans step up brand battle

Marks & Spencer made a further move into financial services yesterday when it announced plans to offer cheap loans to customers who hold an M&S chargecard.

The decision is the latest in a series of moves by large retailers which are using the strength of their brand names to offer other services. Though M&S denied its decision marks a riposte to rivals, it comes just days after Sainsbury's launched a loyalty card which may be used to offer financial services. Earlier this month Tesco launched ClubCard Plus, a budget account with preferential rates of interest.

M&S said: "This is not a reaction to what the supermarkets are doing. We've had a charge card since 1985 and we now have 5 million members. Our research has shown that a lot of our customers would appreciate this kind of service."

Called Premier Reserve, the scheme offers loans up to pounds 3,000. Customers decide the amount of the loan and are given a cheque book with 10 cheques. When they need to top up their normal bank account, either for a large purchase or because they have gone overdrawn, they write themselves a cheque from the loan account into their deposit account. M&S says it will save on the overdraft charges and appeal to people who normally avoid credit.

The interest rate will be 13.9 per cent APR for loans of pounds 1,000 and over. For loans under pounds 1,000 the rate is 14.9 per cent. The rates will be increased after 1 October to 16.9 per cent and 17.9 per cent respectively.

Robert Snaife, retail analyst at Societe Generale Strauss Turnbull said it was all part of extending the power of the M&S brand name: "It's all part of exploiting their matchless goodwill and get people more bound up with them."

M&S already offers personal loans and outstanding balances now exceed pounds 520m. These loans have been sold relatively discreetly through direct mail.

The company launched its charge card in 1985, and then began offering personal loans and unit trusts in 1988. Last year it started selling PEPs and life assurance. Operating profits from financial services have been improving after a slow start. Last year they reached pounds pounds 61.4m compared with pounds 49m in 1995. More than 600,000 new charge card accounts were also opened last year.

M&S financial services have their own separate head office in Chester. the company has had to expand into a second building to accommodate the growth of the business. It expects to recruit an additional 300 staff. a quarter of M&S UK sales are made through its charge card.

Other retailers which have made the move into financial services include Budgens which launched a Visa credit card last year. Tesco may add further facilities to its ClubCard Plus scheme. Virgin has also launched a PEP and is now expanding into life assurance.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash