High noon on the high street

Few people would describe me as a war fiend, but if there is one thing I am enjoying at present, it is the open warfare between financial services providers, all competing for their rivals' customers.

Earlier this week, Halifax announced it is to open a 24-hour telephone- based savings account, Premium Savings Direct. The account offers instant access to funds up to twice a year and will pay from 7.3 per cent gross on deposits over pounds 10,000, rising to 7.85 per cent gross on above pounds 40,000. Standard Life, the mutual insurer, launched its high-interest account last week.

Meanwhile, both Scottish Amicable, the formerly mutual insurer taken over last year by Prudential, and First Direct, the telephone-based financial provider, this week launched separate versions of low-cost pension plans.

Without going into detail on the charges, which come in below many of their competitors, what unites them is their willingness to face the fact that people are likely to halt contributions into personal pensions for perfectly sensible reasons.

Consequently, Direct Line and ScotAm are promising not to penalise customers if they halt contributions early. They are saying that if policyholders switch a personal pension to another scheme in the first few years of its life, the "transfer value" paid out will reflect far more closely than before the amount actually paid in.

This is both unremarkable and astonishing. Unremarkable, because it has taken so long for many insurers to react to the challenge from their telephone-based rivals, who have followed this strategy for several years. Astonishing, because ScotAm had tried desperately to hold the line against this development.

In fact, it even went so far a few years ago as to try to construct a "Resistance Front" (a secret cartel, actually) against high transfer values - to no avail, as it now turns out.

What we are seeing, both with savings and pensions, is a cold new dawn, as some established players (far too few for now) realise that, to maintain their grip on the market, they will have to deliver competitively priced products. One by-product of this is that the old high street-based branch system will be weakened.

Bank and building society staff will be sacked in their thousands over the next few years. But the reality is that this would have happened anyway, and there's not much we can do about it purely as consumers. What we can do is extract the best possible price out of their war.

On a separate note, Barclaycard has issued an eight point checklist for customers in financial difficulties after the Xmas and January spending spree. Its advice might be a tad more credible had it not also run a huge "Don't Put It Off, Put It On" TV advertising campaign throughout December, coupled with advice to cardholders to skip that month's credit card payment.