£25m for new image at Abbey

ABBEY National's 18m customers will be rightly sceptical about the group's £25m rebranding exercise.

A shorter, cuddlier name is no compensation if your local branch has just been closed. Funky new shop fronts will not make queues any shorter.

An edgy, self-deprecating advertising campaign is simply insulting if you are paying over the odds on your mortgage or you are stranded in an obsolete savings account.

It is called the Windscale effect. The nuclear power station changed its name to Sellafield but that did not stop the radioactive leaks into the Irish Sea.

At least the name change is logical and not too drastic. This is not a Consignia (the aborted name change for the Post Office) or an Aviva (the new name for the Norwich Union insurance grouping) and certainly not a Monday - the widely ridiculed moniker briefly chosen by PwC consultants.

But the change in image is striking. Out goes the emphasis on solidity and security. The funky faded lettering - all lower-case, naturally - looks more like that of a fashion retailer or a coffee bar than a traditional bank.

Chief executive Luqman Arnold may be right to distance Abbey from mainstream clearers - that has worked for Egg - but customers still want old-fashioned virtues such as efficiency and value for money.

Some reforms appear excellent. The redrafting of jargon filled customer letters in plain English deserves a gold star. The pruning of the dozens of different accounts is overdue.

Name changes are legitimate if they alert customers and potential customers to concrete improvements in an organisation. They can also help restore staff morale if accompanied by strong leadership and a clear strategy.

The £25m cost might sound excessive but it is justifiable if the revamp helps Abbey start to return to its 1980s glory days as the most customer-friendly and innovative financial services group on the High Street.

The impact on the bottom line will be modest initially. Replacing the six different current accounts on offer at present will, for example, cost £2m as customers on the grottiest terms are averaged up. The big risk is not the rebranding itself but the timing.

Has Arnold pressed the button on the revamp before he has set in place the very necessary operational reforms deep inside the organisation?

The customers - two million of whom are also shareholders - will soon let him know.