Letter from Alliance & Leicester to
the Post Office Ltd[26]
Thank you for your letter of 16 May. Before
I respond to your specific points, I would like to set out some
context.
Alliance & Leicester has been at the forefront
of helping consumers to get free access to cash. Our customers
have for many years had free access to cash at all Post Office
counters and we have worked closely with you on a wide range of
initiatives which have improved consumers' ability to use Post
Offices and also the Post Office's ability to generate revenues—including
being the first bank to sign up to support the Post Office Current
Account.
Regarding ATMs specifically, the Treasury Select
Committee last year commented that "machines which charge
consumers are a legitimate business model. Their introduction
has increased the overall availability of cash withdrawals and
helped sustain small businesses." Our ATM policy is entirely
consistent with that conclusion. We operate non-surcharging machines
when the traffic for the site enables us to make an economic return
on the considerable costs of installing and operating a machine
and, further, all of our machines are free-to-use for Alliance
& Leicester customers. As a consequence, we have a network
of non-surcharging ATMs across the UK far larger than would be
anticipated given the size of our branch network. However, for
those potential sites which do not have sufficient traffic, we
take the view that it is better to provide consumers with choice
by operating surcharging machines rather than simply not providing
a machine at all.
This policy also underpins the agreement between
us governing the provision of our ATMs in Post Offices, which
we continue to follow in good faith. This allows the type of machine
and the fee charged to alter to reflect changing conditions, a
point which was clearly understood by the Post Office when the
agreement was signed.
Turning to your specific points, the increase
in surcharge from £1.50 to £1.75 applies across our
charging estate. It reflects market conditions, is in line with
market norms and represents a balance between obtaining a return
on the costs of running the machines, the requirements of our
site owners and the benefit of convenience those machines provide
for consumers. The majority of the fee, and the majority of the
increase, becomes revenue for the site owner, in this case the
Post Office or sub-postmaster.
As regards the 45 sites which were previously
non-surcharging, consumer usage at each of these sites is too
low to provide a non-surcharging machine economically. A joint
team from Alliance & Leicester and the Post Office discussed
this at some length, seeking to improve the economics of those
sites without switching them to surcharging, but alternative possibilities—for
example the Post Office taking responsibility for filling the
machines with cash—were deemed unacceptable by the Post
Office.
As the current Agreement covering our ATMs in
Post Offices comes to an end, you will be transferring sites at
which you wish to operate a non-surcharging machine to the Bank
of Ireland, and—subject to the granting of a waiver from
you—individual sub-postmasters in other locations will be
able to negotiate their own ATM arrangements. Our respective teams
are working hard on this transition, and we have already agreed
in principle a schedule to enable this complex programme of change
to proceed smoothly. However, we are always happy to discuss changes
to the schedule and, indeed, we have already agreed with your
team a number of sites where the removal of our machine will take
place sooner than originally envisaged. If there is a desire for
the specific 45 sites you mention to be expedited then we would
gladly discuss a practical way to accelerate their removal from
the network whilst bearing in mind the associated financials.
Finally, I note your comment about the Restrictions
Policy. As I understand it, the current plans are that those sub-postmasters
who will not be provided with a non-surcharging machine will negotiate
their own ATM arrangements. I am sure that they will make their
choice giving full consideration to their business needs and the
needs of their customers. If it does not make commercial sense
for them to have a machine, they can choose whether to operate
one at a loss or not to offer the service to their customers at
all.
I hope this has addressed your concerns. I understand
from Graham Halliday that you have sent your letter to the Treasury
Select Committee, and I am doing the same with this response.
May 2006
26 A copy of the Post Office's letter to Alliance and
Leicester can be found at Ev 439. Back
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