Standard Life, one of the staunchest defenders of mutuality, is to take on the high street banks by launching a telephone-based banking service next year. The life insurer said yesterday it had applied to the Bank of England for a banking licence, a prerequisite for a company wanting to take deposits.
A spokesman at the Edinburgh-based group said Standard Life was hopeful of receiving the go-ahead from the Bank within the next few weeks and would start taking deposits early next year. It hopes to roll out a full range of services soon afterwards.
Standard Life is Europe's biggest mutual life insurer with more than 4 million policyholders and assets worth more than pounds 57bn. It said yesterday it was in the final stages of applying for its banking licence.
Launching a banking service would not be a carpetbaggers' charter, the group said yesterday. The bank will be a wholly owned subsidiary and opening an account will not confer membership. Anyway, Standard remained committed tomutuality, its spokesman said.
Standard's service will operate from a call centre in Edinburgh. It will run in parallel with a deposit account from the Bank of Scotland where it currently directs funds from maturing policies. Until recently, Standard Life and Bank of Scotland had a close relationship, with the insurer owning 32 per cent of the bank. Last year it raised pounds 678m by placing all but 2.5 per cent of that stake.
Standard Life's decision marks the latest intensification of the competition for deposits, with supermarkets such as Tesco and Sainsbury's able to offer attractive deposit rates because they are not weighed down by the high costs of the branch-based high street banks.
Last year, Prudential, Britain's biggest life insurer, moved into banking and was quickly followed by Scottish Widows and Friends Provident. Richard Branson's Virgin has responded by offering an all-in-one mortgage and banking service.
Standard Life's banking operation will be headed by Jim Spowart, who set up Direct Line's telephone-banking business. He has said the plan is to "clearly beat" the rates offered by Tesco and Sainsbury, who he believes will be unable to maintain their high rates.Reuse content