Nearly five million
customers of LloydsTSB and C&G will be moved to a new bank this summer when
the bank splits into Lloyds and TSB. The change has been forced on Lloyds by
the European Commission as the price for approving £17 billion of state aid in
March 2009 after Lloyds bought the loss making HBOS.
A total of 631 branches
are to be hived off into a separate company. The branches come complete with 4.6
million customers, eight million accounts and 7500 staff. A sale of all the
branches to Cooperative Bank for £750 million was planned but fell through in
April 2013. The branches are all to be rebranded TSB and will now be floated on
the stock market as a separate company called TSB Bank plc. The rebranding will
happen from September 2013 and the sale is expected to start in the middle of
2014.
The bank has written
to all its customers – those who will move to TSB and those who won’t –
explaining the changes and what they mean. But there remains some confusion.
Hence this blog.
My branch is
changing to TSB
Your account will
shortly become a TSB account on exactly the same terms and conditions. Your
sort code, account number and Internet login details will remain the same.
Payments into or out of the account will not be disrupted and you will not have
to inform anyone of the change.
However, you will be
getting a new debit card and if you have a Lloyds credit card that will be
replaced too. The new cards will have entirely new 16 digit numbers and expiry
dates. The first four digits indicate the new bank TSB. The cards will not be
branded TSB until after the brand is formally launched in September 2013. The
newly branded cards will be rolled out as they expire or are replaced.
Some people have
reported problems using these cards. That should not happen but a new bank
identity can sometimes cause confusion especially abroad until systems have all
been updated. Lloyds says it is working with Visa to resolve this problem. Take
a second card with you at all times (a good general tip anyway).
If you have booked a
holiday or a ticket with the old card you may be asked for it to validate the
purchase when you collect the tickets or go to a hotel. Banks generally advise
destroying old cards for security reasons. But you could keep the old card and
take it with you as well even if it no longer works – about four weeks after
the new one was issued. Make sure you have photo ID with you. If you are
expecting to collect tickets from a machine allow more time to find a human and
try to explain.
Loans and mortgages
associated with the account will move too and become TSB branded. Again, the
Terms and Conditions should not change. A couple who had separate LloydsTSB
accounts could find one is with a branch that moves to TSB and the other may be
with a branch that does not. A joint loan or account or mortgage would go with
the branch where it was opened jointly.
My local branch
isn't my home branch
Your LloydsTSB branch
will normally be the one where you first opened your account. Since then you may
have changed address – people move house far more often than they change banks.
At the moment you can use any local LloydsTSB or Bank of Scotland branch to do
your banking including paying in cheques, arranging finance, or making
enquiries. In future that may not be possible.
1.
If your original branch becomes a TSB and you
continue as a TSB customer then you will not be able to use Lloyds or Bank of
Scotland branches once TSB has fully separated and been sold. Some people will
find that there is not a TSB local to them and may have to travel a lot further
to do face-to-face banking. But all C&G branches will become TSB and are
now available to TSB customers.
2.
If your original branch is staying as a Lloyds
you may find the local Lloyds you have been using will become a TSB. You will
not be able to use that branch to do Lloyds banking once TSB has been sold.
In both cases Lloyds says you will be able to use the same branches as you do now for a while
– even after TSB branches are separately branded later in 2013. But once TSB is
sold the inter-operability of Lloyds or Bank of Scotland with TSB will end. That
is expected to happen after the middle of 2014. It is still possible that
Lloyds and the new owners of TSB will agree that customers can do some things
at each other’s branches. Lloyds customers may be able to use C&G branches
until the final transfer to TSB occurs in 2014.
I want to stay with
Lloyds
Some people are not
happy about the forced move and want to stay with Lloyds. They can do so but
not easily. If your branch is transferring to TSB you can fill in a form to let
Lloyds know you want to stay as a Lloyds customer. You will have to apply to
Lloyds almost as if you were a new customer. Lloyds will take account of your
previous history with the bank but in theory it could reject you if your credit
rating has changed for the worse. Lloyds says that is very unlikely.
You will have to
choose a current account from the present range. That could mean paying for an
account which at the moment you get free. Of course, Lloyds does have fee-free
accounts. But if you get insurance or overdraft deals on your present Lloyds
account you may find that you have to pay for a current account to get similar
deals once you become a new Lloyds customer.
If you do become a
Lloyds customer again, you will have a new sort code and account number and
will have to register afresh for online banking. Lloyds will transfer direct
debits and standing orders. But you will have to give the new account details
to an employer, pension provider or anyone else who pays into your account. Any
‘credit footprints’ due to the change will be removed from your credit history.
I am with C&G
As a C&G customer you will already find
your branch is offering more services such as current accounts. As C&G is
changed to TSB it will become part of a fully independent bank offering loans
and credit cards as well. You are in a different position from a Lloyds
customer and can only move to Lloyds by becoming a completely new customer.
I live in Scotland
All Lloyds branches in
Scotland are becoming TSB. That will leave some people hundreds of miles from
their nearest Lloyds. If you are remaining a Lloyds customer – because your original
branch is in England – then you can use Bank of Scotland as your local branch and
will be able to do so in future. If your original branch is becoming TSB then you
can use the TSBs in Scotland. But after TSB is sold you will not be able to use
Bank of Scotland branches.
I want to leave
Lloyds
If your own branch is
not moving to TSB but you live near a Lloyds branch that is changing to TSB you
may find it easier to move your Lloyds account to TSB. Again, you will be
treated pretty much like a new customer but the bank will take account of your history
with Lloyds. You will have to choose from the range of accounts TSB then
offers. Your sort code and account number will change. Any ‘credit footprint’
due to the change will be removed from your credit history.
Others
may choose to move their account to another bank altogether. Now may be the
moment to forget loyalty and choose your bank from scratch – because of what it
offers, its customer service record, its charges, or its business principles.
You would be able to make the move and keep your Lloyds credit card.
When to move
If you do decide to
move your current account it may be worth waiting a little while. In September
it will become a lot easier to move your current account from one bank to
another. The new Current Account Switch Service will guarantee that the move
will happen within seven days and payments into your account will be moved as
well as those out of it. There will also be a free redirection service which
will capture any payments into the old account and divert them into the new one
for 13 months. The Switch Service is expected to start mid-September. More here
www.paymentscouncil.org.uk/switch_service
I live abroad
If you live outside the
UK you may still have a bank account in a UK branch of Lloyds. If it is
converting to TSB your account will be moved to the new bank and everything
will remain the same. People who live abroad with no UK address cannot open a
UK bank account so you will not have the option of remaining with Lloyds or
moving your account to another UK bank.
Who chose?
Lloyds Banking Group
did not want to give up more than 600 branches and nearly five million
customers. No bank would. So the European Commission laid down strict rules
about which branches it chose and how it dealt with the customers in them. The
branches chosen could be no worse than the ones left behind. Their location was
spread out geographically. Their position in the town or village and their size
had to be no worse than those Lloyds kept. Their customers also had to be at
least as good quality as a typical sample of LloydsTSB customers. Many
permutations were tried until this list – once called Project Verde – was agreed.
All the 185 LloydsTSB
branches in Scotland will move to TSB, all the 164 C&G branches (which
Lloyds bought in 1997) will change to TSB. And 282 of the remaining LloydsTSB
branches in England and Wales will become TSB.
A branch includes all
its customers and their accounts. Lloyds is very constrained by European rules about
what it can do with customers who want to remain with the bank. The
arrangements described above have been agreed with the European Commission and
Lloyds cannot deviate from them in any significant way.
