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To: Rarebird who wrote (65398)	3/12/2001 9:05:00 AM
From: long-gone	Respond to of 116814

OT(Perhaps related to BoE sales?) ISSUE 2117 Monday 12 March 2001 Accounts row threatens bank for poor By Simon English, Banking Correspondent GOVERNMENT plans to set up a Universal Bank for the poor and secure the future of the 18,000-strong post office network are under threat following a row about the involvement of postmasters in the opening of accounts. Banks, already angry at being asked to stump up millions of pounds each year to cover the running costs for Universal, are threatening to pull out of the deal unless the Government accepts that postmasters are not qualified to handle account opening. The Universal Bank was devised by the Department of Trade & Industry as part of the drive to end so-called "financial exclusion" for those who do not have bank accounts. It has ordered banks to offer simple accounts via post offices, and wants to share branding with the banks - another bone of contention. At the same time it is moving to pay welfare benefits direct into bank accounts - a move that will deprive the Post Office of £400m a year in income and threatens to lead to many branch closures. It hopes the Universal Bank will solve two problems, by giving post offices a new role and opening up the financial world to those on low incomes. But banks are very nervous at the plan to allow postmasters to open these accounts, arguing they are likely to become victims of fraud and are not trained to spot danger signs. The industry is asking for indemnity from financial losses should any new accounts turn out to be fraudulent, something the DTI is reluctant to offer. One leading bank executive said: "It is already going to cost us a fortune, now postmasters want a role in opening up accounts. Presumably they won't be doing it for nothing. Who is going to pay for that - us again?" Trade secretary Stephen Byers has arranged a meeting tomorrow with bank chief executives. He hopes to sign a memorandum of understanding with the banks and will claim the scheme has been agreed and is poised to succeed. However, banks say the key issues will be skirted round, to be revisited after the general election. The future of the post office network is a tricky political issue for the Government, as branch closures always cause anger, especially in rural communities. There were 434 post office closures between April and December last year alone. Colin Baker, who heads up the National Federation of Sub-Postmasters, admits his members could be targeted by criminals. "These are social exclusion accounts," he said. "There is a possibility that the post office could be seen as an easy place to con. "We are hanging a lot on this. This is at the heart of all of the proposals for the post office. If it goes ahead, it will save the post office. If we don't get it, the future will be bleak." The DTI declined to comment on the row, beyond saying: "It is part of the negotiations. They are between the banks and ourselves and they will remain so." The big four high street banks were asked last October to stump up between £10m and £12m a year to fund the scheme, with smaller banks paying anything between £5m and £8m. One of the big four, which asked not to be named, confirmed it is prepared to make this issue a deal-breaker if it does not get its way. Universal Bank has had a rocky history. Even Nationwide Building Society, the mutual that markets itself as a friend of the consumer and an antidote to greedy banks, bridled at the plan. Recently it issued a joint statement with the DTI saying it had agreed "in principle" to the scheme. telegraph.co.uk