§ Mr. HancockTo ask the Chancellor of the Exchequer if he will make a statement on his plans for the National Savings Ordinary Account as they effect(a) existing and (b) potential new account holders. [149483]
§ Ruth KellyNational Savings and Investments will shortly launch a new savings account in response to changing customer needs. The new account will replace the Ordinary Account, which was introduced in 1861 and has not kept pace with changes in the savings market. The Ordinary Account is expensive to run and therefore only offers modest returns to savers.
The new account has been designed to meet these changing customer needs and will be straightforward and simple to operate, offering customers greater flexibility in the way they manage their savings. They will be able to make deposits at post offices, by telephone and by post and they will be given an account card which will allow cash withdrawals at post offices or ATMs in the LINK network. This means the new savings account will be cheaper to run compared to the Ordinary Account and the savings will be passed onto the customer in the form of better interest rates.
The new savings account will be available on 29 January 2004 and new Ordinary Accounts will not be available after 28 January 2004. In order to give existing Ordinary Account customers plenty of time to consider what to do with their savings, they will be able to continue using their account in the normal way until 31 July 2004. After that date, no further deposits can be made and any withdrawal will have to be for the full balance to close the account. In the meantime, National Savings and Investments will be writing to Ordinary Account customers explaining their options, including information about the new account and a simple transfer form for those wishing to transfer their savings into the new account.