James Daley

By James Daley

Tesco have been talking about launching a bank account for years. At some stage, I was sure it would never happen. But today it was finally stacked onto the shelves.

It's not a bad bank account. For people who have a habit of busting their overdraft limit, it's cheaper and fairer than most other accounts on the market. And I like the fact that Tesco has gone for a good old fashioned interest charging overdraft, rather than a complex system of fees and buffers.

But for those who remain in credit, it's a fairly unremarkable offering. You get 1 clubcard point for every £8 you spend on the card - which is equivalent to cash back of 0.125% (although can be up to 0.5% if you use your clubcard points in the right way). Compared to Santander's 123 account, which pioneered the idea of cashback in the bank account market, Tesco's offering doesn't look very exciting.

While the account also offers 3% interest, this is restrained to balances of up to £3,000. So if you keep a float of £3,000 in your account at all times, the most interest you'll earn is £90 a year.

This account will not shake up the banking sector

Don't get me wrong, the Tesco account is cleaner and simpler than many on the market, and offers reasonable value. But after so much waiting, I had hoped for something a little more innovative. As one of Britain's biggest brands, Tesco has an opportunity to shake up the banking sector - providing some real competitive pressure to the old guard. But it's hard to see people signing up for this account in their droves. And without lots of customers, it's even harder to see Tesco living up to its potential as a changemaker in this industry.

Although Fairer Finance obviously doesn't have customer feedback on Tesco's record as a bank account provider yet, we did take a look to see how it shapes up on complaints and transparency. In the Financial Ombudsman Service stats, Tesco is below average when it comes to complaints handling - with an average of 45% of complaints being upheld in favour of the customer over the past three years.

On transparency, it's clear that Tesco has made some effort - and after subjecting it to the same tests that we use on other bank account providers, we'd put it amongst the best in the sector. It's the first bank that has managed to write its terms and conditions in less than 10,000 words - which is quite an achievement when you compare it to the 35,000 words that HSBC uses.

We can't guarantee your safety

But the terms are not without some legal nonsense, and they certainly could be laid out in a more accessible way. Frankly, compared to Barclays - which now sets the pace on banking terms and conditions - they're not close.

Here's one phrase I came across in the document this morning: "You should note that some methods we use [to contact you], such as email or text, can’t be guaranteed to be completely secure.". Quite what customers are expected to do with that piece of information, I'm not sure. Worry, perhaps?

So - the verdict? Looking at Tesco's customer scores from other product areas, I imagine that it will end up in the second tier of providers for bank accounts - not the best, but not bad. That feels about right. If you do all your shopping at Tesco, and are addicted to collecting clubcard points, this account is fine. But there are better value accounts out there - and there's very little that leaves Tesco standing out from the pack. Let's hope there will be more to come.