Fear of finance

As Fear of Finance foresaw last week, NatWest Bank is as fed up with providing its 6.5 million customers with a plain vanilla current account as many of them are with the service they have been getting. It is now rolling out a new NatWest Advantage Premier account which will be offered next month by invitation only to selected customers.

Perhaps 10 per cent of its customers will be considered eligible, and receiving an invitation is clearly intended to convey considerable cachet, although NatWest does rather let the side down by inviting customers of other banks who like the idea to call its customer-service line on 0800 505050.

Eligible customers will probably be earning over pounds 20,000 but young and upwardly mobile customers earning rather less will be considered, and those whose best years are behind them may need to earn rather more.

They will not necessarily have credit balances in their accounts, but they should be good credit risks and their lifestyle should ideally suggest they will want more than their share of financial services, including loans, insurance, mortgages, and investments such as PEPs and unit trusts and share portfolios.

Customers who take up the offer will become eligible to borrow on agreed overdrafts up to pounds 2,500 at 9 per cent, 1 per cent below the rate paid by Gold Card customers and roughly half the rate charged ordinary customers. Secured loans will cost 8.75 per cent. Customers who stay in credit will earn interest at up to 3 per cent according to the amount they keep.

Benefits include a gold Mastercard charge card with air miles, complimentary multi-trip travel insurance, commission-free travel money, complimentary extended warranties and various lifestyle services including discounts on holidays, travel, restaurants, theatre tickets and wine purchases, a 24-hour telephone banking system to make transfers and pay bills, and "special access" to investment services the bank can offer, including NatWest's unit trust PEP and guaranteed income bond.

A personal insurance adviser will also offer independent advice and a claims service.

There is, of course, a price to pay. NatWest will levy a flat-rate service charge of pounds 150, almost double the cost of a Gold Mastercard, but if the take-up suggests the service is a success, in the new year NatWest will probably introduce an intermediate service with fewer frills and lower charges, targeted at a wider slice of its customer base.

NatWest, of course, is not exactly blazing the trail here. Barclays went national the previous week with its own Additions account, which offers a range of 10 extra services, including telephone banking, a free pounds 100 overdraft facility, an automatic pounds 5,000 life assurance, a free will-writing service, cheap medical cover for children under 21, and a Connect card with a pounds 100 cheque guarantee facility, all at a flat fee of pounds 5 a month.

Royal Bank of Scotland launched its own Royalties account in April with a similar range of services for a pounds 4 monthly fee.

NatWest has joined the club in insisting that its existing current account service including free banking (ie no bank charges if the account stays permanently in credit) is unaffected by its new offer, but the Cooperative Bank, the pioneer of free banking, insists that its rivals are introducing charges by the back door, and will quietly allow their free banking services to wither on the vine if, and when, the fee-based offer becomes well established. We have at least been warned.