Lloyds and TSB to split: What it means for you

Michael Connolly
MSE News Reporter
8 August 2013

Millions of Lloyds TSB customers will be transferred to its new TSB bank from next month, so MoneySavingExpert.com explains what this really means for you.

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From 9 September Lloyds TSB branches will be split and re-branded as either Lloyds Bank, or TSB. Both will remain part of Lloyds Banking Group until TSB is sold off, which is expected to take place next year. (See our Best Bank Accounts guide for the top deals.)

We explain what's happening below.

Who is going to be switched to TSB?

Of the 1,931 Lloyds TSB branches, 631 will be rebranded as TSB, and the remaining branches will change to Lloyds Bank. If your account was opened at any of the 631 branches be rebranded, you will become a TSB customer.

It also means some customers may end up being both a Lloyds Bank and a TSB customer if they opened different products at different branches.

Below is a breakdown of which branches will be rebranded as TSB:

  • All 185 Lloyds TSB Scotland branches
  • All 164 Cheltenham & Gloucester branches
  • A further 282 Lloyds TSB branches – use Lloyds' branch checker tool to see what's happening to your local branch

I'm moving to TSB. Will my current account change?

Lloyds says nothing will change for those moving to TSB – the product details in your terms and conditions will remain the same, although debit cards will eventually be re-branded.

I'm moving to TSB. Will my savings rate change?

Lloyds says nothing will change for those moving to TSB – your existing savings rate won't change and the product details in your terms and conditions will remain the same.

I'm moving to TSB. Will my savings protection under the Financial Services Compensation Scheme (FSCS) change?

Anyone moving to TSB will be moved to the Lloyds TSB Scotland banking licence, which is separate from the main Lloyds Banking Group licence, which applies to Lloyds Bank, Halifax and Bank of Scotland.

This means you'll have up to £85,000 protected with TSB under the Government backed FSCS, which guarantees you your money back if the bank fails.

If you have any cash saved in any of Lloyds Banking Group's other brands, this will have a separate combined protection of up to £85,000 under the separate Lloyds Banking Group licence.

This means you could have up to £170,000 protected if you have a TSB and a Halifax savings account, for example.

I'm moving to TSB. Will my mortgage rate change?

Lloyds says nothing will change for those moving to TSB – your existing mortgage rate won't change and the product details in your terms and conditions will remain the same.

How many customers are affected?

4.6 million customers will be transferred to TSB, including 3.1 million personal account customers.

I'm not moving to TSB. What does it mean for me?

Lloyds says nothing will change for those staying with Lloyds Bank.

Hang on, can I get a better deal elsewhere?

If you're unhappy about being switched to TSB, you can contact Lloyds asking to stay with it and it'll grant this request.

But first you should use this as an opportunity to check whether you're getting the best deal with Lloyds and consider switching elsewhere.

If you're always in credit, our best buy current accounts include First Direct* (min. pay-in £1,000/month) and Halifax (min. pay-in £750/month), which both give £100 to new customers switching to them, and Santander's 123* account (min. pay in £500/month), which pays 3% interest for those with £3,000 to £20,000, plus cashback of up to 3% on bills paid by direct debit – although it does charge a £2/month fee.

If you always go overdrawn our best buys include the First Direct* 1st Account, which has a permanent £250 0% overdraft, Nationwide's* FlexDirect account (min. pay-in £1,000/month), which has a 0% arranged overdraft for the first 12 months and the Halifax Reward account, which has a 0% overdraft for the first 6 months.

See our Best Bank Accounts guide for full information on all the top deals.

Will I be able to use both Lloyds Bank and TSB branches?

For now customers will be able to use both banks to carry out the majority of transactions.

This will last a couple of months, although it's not yet been decided when exactly customers will only be able to use their own bank for transactions. Lloyds says customers will be notified when this happens.

Will TSB offer any new products?

Lloyds says in future TSB may offer new products to compete against Lloyds Bank.

Why is it doing this?

Lloyds has to offload the branches under European competition rules due to the group's sheer size.

Government-backed Lloyds, which includes Lloyds TSB, Cheltenham & Gloucester (C&G), Halifax and Bank of Scotland, was originally planning to sell more than 600 branches to the Co-operative Group, but this deal collapsed in April (see the Lloyds branch sale to Co-op collapses MSE News story).

* Using these links helps the site stay free to use, as they're ‘affiliated links’ which invisibly take you usually via affiliate linkage or commercial money sites, which then pay this site. You shouldn't notice any difference, the links don't impact the product at all and the editorial line (the things we write) is NEVER impacted by the revenue. If it isn't possible to get an affiliate link for the best product, it is still recommended and still included. The following links, First Direct, Nationwide and Santander are identical unaffiliated links provided for the sake of transparency. Click on the following link for more details on how this site's financed.

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