Personal Finance: Barclays' new deal fails to square up

Every now and then, someone comes along with a new idea that changes the way we perceive the world of personal finance.

More than a decade ago, Direct Line did it with car and home insurance, which it decided to sell over the telephone. First Direct, a subsidiary of Midland Bank, has taken since 1989 to achieve the same with telephone banking but appears to have succeeded at last.

Virgin did it a few years ago, when it launched its low-cost tracker PEP, also available over the phone. The company's product has now been superseded by better ones, but its initiative forced others to follow suit. The slew of supermarket banks - Tesco, Sainsbury's, Safeway - in the past 24 months is another marketing idea which combines simplicity with a good deal for savers.

Will we see b2, the new subsidiary of Barclays Bank, in a similar way in a few years' time? Anything is possible, of course, but I doubt it. Perhaps I should clarify my view: I hope not, for were it to happen it would be a sign that the British investing public has opted for a mediocre deal wrapped up in supposedly "cool" typography and design.

Details of the b2 product are reported on our front page. Essentially, what the company says it is offering is a hybrid product, with the potential of better returns than a building society account, similar risks and the same ease of access.

But the reality is that almost anyone considering an investment into this sort of fund is unlikely to want to use it as some sort of instant access account. They will want to commit their money for the longer term and, mostly, be prepared to leave it untouched for several years in the ASA. If so, despite the much-vaunted accessibility of the b2 account - 7am to 10pm, seven days a week - most people other than a few loonies and show-offs will tend to stick with more regular calling times. Yet they will still pay for a "service" they never use.

Moreover, the b2 offering is worse, in terms of its exposure to any potential stock market gains, than many of its rival products. Unless the present bull market continues for the next seven years, potential returns are unlikely to be that exciting.

Over shorter periods of time, it is worth remembering another company which sold a three-year guaranteed fund in the early 1990s. Scottish Provident vacuumed up hundreds of millions of pounds from savers who subscribed to several tranches of its Capital Guarantee Bonds. Yet when the bonds matured, in most cases the money would have done better had it been left in a building society. Some deal.

There is also something slightly sad about Barclays owning up to the fact it can't attract punters under under its own steam and has to come up with another name and trendy imagery to do so.

If so, I'm not convinced this is a winner. It smacks too much of corporate fortysomethings devising a strategy to target a market of fiftysomethings who want to be thirtysomethings. Mark Bogard, managing director at b2, calls it "safe but exciting". I call it William Hague with a baseball cap.