Tesco Mortgage plans delayed
22 September 2011 10:10
Tesco's long-awaited move into the mortgage market is set to be delayed until after a pivotal Christmas trading season, sources said today.
Tesco Bank was due to offer its first mortgages this autumn but its entry is not now expected until early 2012 as it ensures its systems work properly after online savers were locked out of their accounts in June.
The supermarket giant is also reported to be focusing on Christmas trading, amid rumours new chief executive Philip Clarke will trigger a supermarket price war next week with a new offensive to kick-start sales.
Tesco is expected to shift the grocery battleground from special offers, which have become increasingly common since the recession, onto everyday low pricing and greater rewards through its Clubcard loyalty scheme.
Its fledgling banking arm is expected to provide heavyweight competition to the existing players when it starts offering mortgages and current accounts.
But Tesco is still testing its systems to make sure there are no technical problems.
Earlier this year, savers were locked out of their accounts after a new IT system was installed.
The Cheshunt-based chain is still also waiting for approval from the Financial Services Authority to launch products such as mortgages.
Matthew Truman, an analyst at JP Morgan Cazenove, said Tesco "is very close" to being able to launch new products, but they are more likely to be in early 2012.
He added: "Mr Clarke will likely hold off launching a push on credit cards and new products such as mortgages until he is entirely comfortable that the Tesco brand will not be tarnished by any future problems with the systems."
A Tesco Bank spokesman said: "We are in the advanced stages of the regulatory process and will be in position to provide details of the launch soon."
Meanwhile, Tesco is rumoured to be plotting a significant price offensive as it looks to stem recent losses in grocery market share amid strong competition from discounters Lidl and Aldi.
Asda has upped the stakes in the supermarket pricing war this year with a scheme that sees it guarantee to be 10% cheaper than its rivals while Ocado and Waitrose have matched their prices with Tesco's.
Sainsbury's is also trialling a price matching scheme in Northern Ireland.
Many of Tesco's price initiatives in recent years have been based around offering more rewards through its Clubcard loyalty scheme, which it claims gives it a unique point of difference over its competitors.
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