Virgin to take on financial services

Virgin boss Richard Branson has confirmed what many in the industry have thought for years. Virgin is about to bring its brand of financial services distribution to Australia.

And Branson is using the same tactics he used successfully to launch the Virgin brand into the UK financial service industry. Virgin entered the UK market about three years ago and racked up strong sales figures in a short period of time by offering simple products at competitive prices and attacking the rest of the industry. He also leverages off his public image as champion of the consumer.

He claims the industry in Australia "confuses and rips off" consumers and Virgin will save the day with a financial services arm open for business within the next year.

He says the industry hides fees and charges too much.

Branson says a team of people are currently looking at Australia and were running low-profile experiments over the Internet to test the market. The Virgin Direct Australia Web site is one of those experiments, launched last week. It offers only savings accounts and home loans, in partnership with AMP Banking and targets Virgin Blue and Virgin Mobile customers.

Virgin is already affiliated with AMP through the Virgin Direct business in the UK which is 50 per cent owned by AMP.

Branson says Virgin Direct was one of the two fastest growing financial services companies in the UK.

Sir Richard said from nowhere three years ago, Virgin Direct now has more than STG4 billion ($A11 billion) under management in the UK.

Branson highlighted charges by fund managers as an example of where Virgin financial services may benefit Australian consumers.

He also hinted that the group's marketing campaign could centre on index funds, probably structured as exchange traded funds. He claims only one in a hundred fund managers would beat the local share index over periods between five and 50 years.

"Our advice to people is to track the share index. We would enable people to do that at a very, very cheap price," he says.

"In that way they haven't got fund managers buying their shares, selling their shares and charging them every time they do it ... and all the other hidden charges that go with it."