Marks & Spencer first bank to offer fee-only service

The retailer will offer two current accounts, charging users £15 and £20 per month, according to the Financial Times.

Retail Week revealed last month that M&S was to launch a bank.

Although customers will be charged the retailer said they will benefit from in-store rewards which would be worth up to £658 per year. This is made up from £40 of vouchers, 20% off a monthly spend of £250 for the first year, free hot drinks and access to higher interest rates on savings accounts. The more expensive account will also offer free travel insurance.

UK banks have been moving towards fee-charging accounts but M&S is the first not to offer a free service alongside them.

Chief executive of M&S Bank Colin Kersley said recent events, such as Libor rigging and mis-sold loan insurance,  which have caused consumers to lose confidence in the big banks, could help M&S attract customers.

“We didn’t expect the world to be as it is,” he added.“The number of people wanting to transfer is moving up but we are not trying to take on the mass market.”

The retailer expects to offer mortgages in 2013. Customers will not receive interest on balances but will be blocked from exceeding their overdraft limit so will not incur penalty fees.