Banks must do more to curb packaged account mis-selling, warns regulator

With a packaged account, you pay a fee to your bank in return for benefits, most often bundled insurance policies. The practice of selling packaged bank accounts – and the connected complaints handling processes – have been the focus of a recent review by the Financial Conduct Authority (FCA).

The FCA inquiry found that although eligibility checks for travel insurance had improved, firms were less effective in checking customers' eligibility for other types of insurance, such as gadget insurance and breakdown cover – meaning some customers aren't getting the best deal for their personal circumstances.

The review, which covered the period from October 2014 to April 2016, also showed that more needs to be done around complaints handling for packaged bank accounts. It found that many customers who made complaints in late 2014 (when the level of complaints was increasing) did not receive a satisfactory outcome – a finding supported by the number of complaints made to the Financial Ombudsman Service in the same period.

If you've taken out a packaged bank account and feel it was mis-sold, check out our Reclaiming Packaged Bank Accounts guide.

What are packaged bank accounts?

Packaged bank accounts are essentially where you pay a monthly fee for additional benefits (usually insurance) on top of having a bank account.

In 2013, the FCA introduced rules that mean bank account providers are required to establish whether customers are eligible for the products offered with packaged accounts. The providers must also continue to review whether these products meet customers' needs.

Throughout the term of insurance policies included with packaged accounts, firms must provide the customer with an annual statement outlining any qualifying requirements to claim under each policy. In cases where the customer has reached the age limit on claiming under one of the policies, this must be outlined on the statement.

Is a packaged bank account right for me? It really depends on your circumstances, as what represents good value for someone else might be an unnecessary expense for you. If you need the benefits on offer then having a packaged account potentially works out cheaper than purchasing them from individual insurance providers – although you should always check that this is the case before signing on the dotted line. Key to packaged bank accounts is to know exactly what you're getting for you money

Martin Lewis, MoneySavingExpert.com founder, says: "Packaged bank account reclaiming has been one of the hidden success stories of recent years; I'm constantly swamped with messages from people who have managed to claim money back. But that's not to say that packaged bank accounts are wrong for everyone.

"If you make a conscious choice to take out a packaged bank account then there can be some great deals out there. However, if you were upsold it or were told by your bank that you had to have one – as has been the case for hundreds of thousands of people – then you should look at our mis-selling guide."

Packaged bank accounts are essentially where you pay a monthly fee for additional products - usually insurance

I think I may have been mis-sold a policy, how do I make a claim?If the provider didn't check your suitability for the additional benefits when you took out your packaged account, you've been mis-sold and you should be able to reclaim the account fees you've previously paid for free, plus interest.

You may have been mis-sold if one of the following applies:

• You were told that you needed a packaged bank account to get a loan, overdraft or another product.

• You are too old for the insurance.

• You were pressurised into taking the account.

• The price was increased without you being notified.

• You tried to cancel, but were forced to keep the account.

• You were told the account would improve your credit score.

For full info, check out our Reclaiming Packaged Bank Accounts guide.

What does the FCA say?

Jonathan Davidson, executive director of supervision, retail and authorisations at the FCA, says: "We continue to believe that there is a place in the market for packaged bank accounts, as they can provide good value and convenience for consumers.

"But we expect these products to be sold fairly and for customers to have the information they need to make an informed choice. And customers should not have to complain to the Ombudsman to get a fair outcome if things go wrong."

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