BY JESSICA HODGSON

LONDON—Tesco PLC, the U.K.'s largest supermarkets group, on Monday said its bank unit had delayed the planned launch of a current account for U.K. customers until 2013 because of the difficulty for customers to switch bank accounts.

The delay is a setback both for Tesco and for the U.K. government's drive to open up the U.K.'s retail-banking landscape to reduce the dominance of Britain's big five retail banks.

Tesco said earlier that it would launch current accounts in 2012. A spokesman said Monday that the delay was driven by the ...