Santander scraps packaged accounts: What does it mean for you?

This throws up two key issues for customers with one of these accounts:

• Were you mis-sold one of these accounts? There is no evidence Santander is guilty, but the industry as a whole is under suspicion. If you feel you were mis-sold any packaged account, make a claim — full details below.

• You will be moved to a poor-paying account, so make this a trigger to switch now.

What's happening?

Santander, which hasn't sold packaged accounts since March 2012, says the move will simplify its current account range. It adds this should reduce errors and complaints, and mean customers get a better service.

Santander claims the decision is completely unrelated to new rules aimed at preventing people from being mis-sold packaged current accounts with benefits they can't use (see the Packaged account shake-up MSE News story).

A packaged account is where you pay a monthly fee — in this case up to £20/month — in return for services such as travel insurance, mobile insurance and breakdown cover.

The move will see all customers with a Santander packaged account moved to its free Everyday current account from 19 October, though the overhaul won't be complete until late 2014.

From 30 September 2014, the free travel insurance with Santander's off-sale Premier and Premier Direct current accounts will also be removed, and the accounts will automatically be changed to its Everyday current account.

Were you mis-sold?

There is no evidence of widespread mis-selling of Santander accounts, but the industry as a whole is under the microscope on this topic.

Figures from the Financial Ombudsman Service released yesterday showed complaints about packaged accounts are rising.

The Ombudsman – the free, independent complaints arbitrator – received 736 new complaints about packaged accounts between April and June this year, compared with 1,629 during the whole of last year.

Two-thirds of these cases have been upheld in favour of consumers.

The Ombudsman says some customers have had their fees refunded in full. In other instances it'll order your provider to give you the service you thought you were getting but weren't.

If you've feel you've been mis-sold a packaged account by any provider, complain to that provider.

If you don't get a satisfactory response in eight weeks, take it to the Ombudsman. See our Reclaim Packaged Accounts guide for how.

What's the best bank account for you?

The Everyday account is far from the best current account. It just offers basic facilities and there are no big perks such as a permanent interest-free overdraft, in-credit interest or a sign-up bonus which are offered elsewhere.

Santander itself has one of the best current accounts. The 123 account offers up to 3% cashback on bills and up to 3% interest on credit balances between £3,000 and £20,000.

Santander says you're free to switch to its 123 account at any point before or after the switch takes place. But you'll need a minimum monthly income of £500 to get it, and it costs £2/month – so work out if it's right for you first.

Of course, you may be better off with another bank. See our Best Bank Accounts guide for the top deals.