What the Lloyds Co-Op sale means for customers

Lloyds at the torch relayChris Radburn/LOCOG/Press Association Images

Lloyds TSB has been forced to sell off 432 branches by an EU competition ruling. Today it emerged that these branches are being sold to the Co-Operative bank - and with them 4.8 million customers, who hold 3.1 million current accounts.

So if your branch is one of those sold, what does it mean for you?

The branches

The branches include some of the ones branded as Cheltenham and Gloucester (which is part of the Lloyds group) and Lloyds TSB in Scotland. If you happen to hold your account in one of these branches you don't need to do anything just yet. Nothing will happen immediately, and you will be sent a letter by the bank before you are affected at all.

The deal isn't even due to be finalised until the end of 2013, and has to be approved by the FSA, so there's no need to rush any decisions.

Changes

Over time, these branches will be rebranded as TSB, and your account will be transferred to be managed by the Co-Op, so your account, your debit card and your cheque book will change. There is some confusion over whether you will get a new account number and sort code. Lloyds is saying that you won't but the Co-Op says it is too early to tell.

The transfer will be managed by the bank, but you would be wise to keep an eye on it during the changeover to make sure nothing goes awry. Again, you will receive a letter announcing these changes long before you are affected. If you tend to bank in the branch itself, there should be no changes to the staff, so you will still see the same people you have always dealt with.

Long-term changes

There has been some talk that these TSB branches will eventually rebrand as Co-Op, but there is no timeline for this, so once you are part of TSB, that is all the change you'll see for a while to the name of your bank.

There's a good chance that the terms and conditions on your account will change. One thing that's worth keeping an eye on is that Lloyds current accounts are unusual in that they pay interest on positive balances, so it will be worth seeing whether this feature remains after the transfer - and how much of an impact it will have on you.

Other than that, neither of the two banks tend to set the world alight with competitive offers, so there is unlikely to be any major change - although of course it is worth checking any correspondence very closely to see how your products are affected.

Advantages

One real plus point is customer service, for which The Co-Operative Bank tends to receive very high scores. In the most recent Which? survey of banking customer service, it came second, with a rating of 79% - second only top long-time table-topper First Direct.

The only proviso here is that the deal will dramatically change the Co-Op - more than doubling the branch network and taking it from holding 1% of the market to 7%. It has bought three call centres as part of the deal, and Lloyds is paying for the rebrand to TSB. However, we cannot tell at this stage what difference these changes will make - if any - to the service.

Another benefit customers may like is that their new bank will follow the ethical ethos of the co-op. Michael Ossei, personal finance expert at uSwitch.com, says: "Unlike traditional banks, the Co-op's reputation has been left untarnished by the banking crisis, giving them even more of a competitive edge. With this in mind, it's hardly surprising that six out of ten (60%) consumers believe new players, including the Co-op, have learned from the mistakes of the high street banks, while more than half (52%) believe they care more about their customers."

Your options

Of course, if you are really worried by the move, you don't have to accept it. There is no facility for automatically staying with Lloyds - because trying to poach customers was outlawed by the deal. Therefore you will have to close your account and open a different one at one of the branches that isn't being sold.

Of course, once you have decided to close an account and switch, it raises new possibilities. You don't have to rigidly stick with Lloyds. The time you switch is a great time to take a look at the whole market and ensure you get the account that suits you best.

That way, whatever happens, you will be better off as a result of the sale.
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