Halifax is being forced to withdraw its Extras current account by the end of the year because of a new Financial Services Authority (FSA) regulation, which is expected to increase red tape when selling general insurance.
The company claims that once new regulations take effect from next year, the cost of providing the account, which offers free breakdown and travel insurance, will be prohibitive.
The move is an embarrassment for the bank, which relies heavily on the word “extra” in its marketing and uses the tagline “Always giving you extra” in its advertising.
A spokesman from Halifax says existing account holders will be unaffected, but it will not open new Extras accounts after January 1, 2005. However, he says, packaged accounts remain a prime target area for the bank. The Extras account was launched in July last year, and was supported by advertising featuring employee and brand icon Howard. (MW July 31, 2003). The Extras account attracts a lower interest rate of two per cent, rather than the standard Halifax rate of three per cent but no monthly charge.
It also offers a package of services, including free Green Flag breakdown cover and European travel insurance, as well as other insurance discounts as long as the account is open.
Halifax is heavily promoting its current accounts, and is attracting 25 per cent of the new and switchers market. The packaged account area has been heavily marketed by rival banks, which charge a monthly fee for the additional features.