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5 August 2020
If you pay or paid a monthly fee for your bank account, you may be able to reclaim £100s or £1,000s. There's growing evidence accounts were systemically mis-sold – with many people flogged worthless added insurance. Here we explain, step by step, how to reclaim packaged account fees for free – with a free online tool to help draft and manage your complaint (or free template letters to do it yourself).
Packaged accounts can be brilliant, but they can also be useless. These accounts are where you pay a monthly fee for your account in return for benefits, most often bundled insurance policies. If you've chosen one based on a rational decision, it's probably a good account as they can be the cheapest way to get many types of insurance.
But if you were flogged one by a pushy sales agent, you could be owed serious cash, as banks have been found to have systemically mis-sold them.
If you don't need the insurance, then packaged accounts aren't right for you. Simple.
If you do, it's all about whether it's cheaper to buy the insurance elsewhere, so do the maths. Don't think £15 a month, think £180 a year; so always multiply the monthly cost by 12 to get the cost per year as the way to compare insurance costs to see if it's worth it.
If you've got a useless packaged account, cancel it to stop the rot and ask to switch to a fee-free account. Don't worry if you were mis-sold, you can still reclaim if you do this.
No, not at all. In fact, in some cases we love them and we think they're the cheapest way to get insurance.
For example, Nationwide FlexPlus is great if you need all the bells and whistles. For £13/month you get:
See our Top Packaged Bank Accounts guide to find the best for you. The problems tend to stem from when people were 'upsold' them from their bank. If you make an active decision to find the best one for you, and you make sure it fits your needs, then you can get a great deal.
No, that’s a different campaign. Bank charges are the penalties the banks and building societies levy when you go beyond your authorised overdraft limit. These can be hefty, at up to around £15 a pop, and can add up quickly, crippling some people’s finances.
For full info, see the Reclaim Bank Charges for Free guide.
If you're unsure, the account fee will show up as a transaction on your statement, under the name of the account you're signed up to. Check current and old statements, or call your bank (you can ask for copies of old statements).
If you find these transactions and don't remember signing up, that itself could be a sign you've got a complaint. If you discover a payment, collect as many statements as you can that contain them. You'll need the evidence.
Yes. Even if you no longer have the account, if you think you were mis-sold and you can get your hands on the paperwork then you can complain to your bank going as far back as when you had the account.
However, it gets harder to complain about a packaged bank account that is over six years old.
That's because banks have been known to use 'time limits' as a reason for rejection, and in the event you need to escalate your case to the free Financial Ombudsman then this must be done within six years of the package bank account being sold or within three years of knowing you could make a complaint about it.
If you were flogged insurance, the rules mean banks need to check the cover is suitable. It's this that has often failed to happen. The key is what you were told (or often NOT told) at the point of sale or upgrade.
Banks have a responsibility to ensure the insurance was right for you at the point they sold it.
Here are the key mis-selling categories. If you fit one or more of these, you're likely to have a case (if any apply, go to the how to reclaim section):
1. You were wrongly told you had to get it, eg, to get a mortgage
Customers were often told that they had to sign up to a packaged account to get a loan, mortgage or other product. Or that their other application would be declined if they didn't get a packaged account. This is blatant mis-selling.
Sometimes it was a straightforward lie that you had to get the account, but on other occasions, sales staff wouldn't have told you about a free alternative.
2. You were too old for the insurance or had a medical condition
One of the big problems with these accounts was people signing up thinking the insurance protected them, but when they claimed they were told they were ineligible. A classic case was people too old to claim on travel insurance, as these policies often have upper age limits, but also if you weren't asked if you had any issues that may have stopped you from claiming, eg, a medical condition that may invalidate travel cover. Also, if the bank didn't check you were eligible for the insurance each year, you could have a claim.
3. You were misled into taking out the account
The regulator has said packaged accounts were "generally sold rather than bought". We've heard from bank staff under incredible pressure to sell these accounts. Examples include:
Note: Rules came into force in March 2013 to stop these high-pressure tactics, but that doesn't stop you reclaiming if you bought under duress.
4. It hiked the price and didn't tell you
Quite simply, you need to be told of a price rise. Yet many banks simply upped the price without notice.
5. The fee was added without your knowledge
We've heard from plenty who didn't realise they even had a paid-for account until scouring their statement – possibly the result of a bank error, an overzealous salesperson or being added by deceit without their permission.
This can happen when getting an account for the first time with a bank or for existing customers 'upgraded' without their consent. Dig out old statements to check you're not paying out £10-£25/mth for an account you didn't sign up for.
6. You tried to cancel but were forced to keep it
If you were told you had to keep the account when you asked to cancel it, it's likely you've got a case for a reclaim.
But there's a fine line between being forced to keep paying up and sales staff strongly encouraging you to keep it. It's far less likely the latter could be interpreted as mis-selling, unless high-pressure tactics were used.
7. You were told it was the only way to get an overdraft
Many have told us that they went to their bank to ask for an overdraft, but were told the only way they could get one was to get the packaged bank account.
It's a fine line, as sometimes the packaged accounts do have higher maximum overdrafts than normal, 'free' accounts. But if other accounts that allowed overdrafts at the level you wanted were available, you could have been mis-sold.
8. No one mentioned you needed to register your phone/car
For example, your iPhone gets stolen and you think "it's OK, my packaged account will cover it". You go to make a claim, only to discover that because it wasn't registered – which no one mentioned it had to be – you're not covered.
9. You were told having one would improve your credit score
Good financial management will help your credit score, not a packaged account specifically. If you were told this, and took one out as a result, head to step three for what to do next. And if you're after ways to boost your credit score, see our Credit Rating guide for tips to making yourself more financially attractive.
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But be prepared for a fight. We've seen some banks just change the insurance, so customers become eligible, as a way of appeasing complainants. But that doesn't change the fact that you were still paying for useless cover, so hammer home that you want ALL your fees back.
You're entitled to 8% interest on any claim, as it's assumed you'd have earned money on that amount had it not been taken from you.
This is calculated at a flat 8% a year – it's not compounded, so you don't get interest on the interest. Say you reclaim £100 for two years' worth of fees. If the interest compounded, year one's fee reclaim would get you £108, and year two's would get you £108.64. Flat interest just gives you a straight £8 each year.
Here, you should claim for half the total fees back.
MoneySaver Robert emailed us his story. He was promised an overdraft and an improvement on his credit score for taking out a packaged account with NatWest. He felt pressured into getting it, and never used any of the insurance policies.
After complaining to NatWest he was refunded £739, including interest, within hours.
First, I changed my account to a basic account. Then I called NatWest to register a complaint about being mis-sold my Advantage Gold account.
The man said the complaints team would call me back. For some reason, no one got back to me for two weeks, but when they did, they asked why I thought I'd been mis-sold.
I explained I was pressured into having it –that the salesperson promised I'd get an overdraft with the account, plus she told me how good all the benefits were. The woman who sold me the account even said it would improve my credit score... but, of course, it didn't.
The complaints handler checked to see if I used any of the account benefits. Because I didn't go on holiday or own a car at that point, she could see I'd never been able to use the travel insurance or breakdown cover.
That call was at 1pm. By 5pm, the full refund of £739 was in my account – including fees and 8% interest. She also sent me a letter explaining what she had done and how she came to that decision.
That money was enough to pay for me and my girlfriend to go on a holiday to Alcudia in Majorca. Thanks again for the advice on your website.
And here are a few others from emails and our forum:
I wanted to have an overdraft of £700 and was told the only way I could get an overdraft was to take out an Additions account.
On this basis alone Barclays told me that I was mis-sold and thus I received everything I had paid to them over the previous 18 years and had a credit into my account of over £2,950 including interest! And I continue to have the same overdraft rate. So a big THANK YOU to you all at MSE!
Jason, via email
Thank you so much, Martin. I read on your site about being mis-sold a bank account that had benefits I already had, and decided to complain. A week later I had my account credited with £1,612. I am extremely happy and wanted to thank you very much.
Fiona, via email
I took out a Silver Account with Lloyds when I got my mortgage nine years ago and was told it would need to be maintained to keep my mortgage rate. After a little bit of work, a few emails and phone calls, I got a full refund plus interest – approximately £1,400.
Persistence is key as originally they only offered £400!
Lauren, via email
If you've read the above and think you've been mis-sold a packaged bank account you can make a claim using our new free online reclaim tool. Alternatively, you can use our free template letter.
Our free online tool helps draft a letter (which you can alter before sending), sends it, tells you when you've a response, keeps track of your complaint and escalates it if necessary.
We do this using the complaints firm Resolver, which provides the technology, but the underlying template letters and logic behind it are ours. We're working with Resolver on many projects to combine our expertise on how to complain with its cutting-edge technology.
All you need is your account number, the reason you think you were mis-sold (see The mis-selling checklist above) and the date you took out the product, plus copies of your statements or other relevant documents (Resolver lets you attach these before sending off the complaint).
Alternatively if you prefer you can submit your complaint directly to the bank, using our free template letter to help.
The most important thing to understand is that with financial firms you have a RIGHT to be 'treated fairly'. Think carefully about why you've not been treated that way.
Speak to your bank or check its website for the address of the complaints department. Generally these things are best done in writing, but if that's too difficult, don't worry about calling. Just ask it's noted down as a formal complaint, and also ask for written confirmation.
Don't feel you have to be formal. Just explain the point clearly, concisely and honestly as if you were explaining to a friend why you've been wronged. To help, we've put together a template letter to start you off – download it and fill in the blanks (use it to help start you off, but the more you write it in your own words, the better):
Important: Keep a copy of the template letter – it'll be helpful if you end up needing to go to the ombudsman.
But there's something crucial you need to understand. At this stage, reclaiming's like a game of 'Who blinks first?' This is important, so we're shouting it...
Your bank may say "no". If so, don't worry. You can take your case to the ombudsman (full help in section below).
The same questions would still be asked. Investigations would look at what information was available at the time of opening the account, whether verbal, in print, or both.
Factors like the fee being clearly identified along with what was included with the account are all significant. With online applications, it'll be a case of assessing the clarity of the information displayed.
Possibly. The key to reclaiming is whether staff sold you an account that didn't cover you for the main thing you wanted it to.
So if you took out an account because you wanted the travel insurance, but at the point you needed to claim you discovered you were ineligible, then it doesn't matter that you were eligible for the included breakdown and mobile insurance – the travel insurance would be key. According to the ombudsman, each case will be looked at individually and the whole picture considered.
The key here is whether you could have used the policy. If you were eligible but simply never had a need to use it, that's not mis-selling – unless you never realised you actually had the account.
However, there are plenty of reasons that policies can be unsuitable – read through the Have I been mis-sold? section to decide whether you have a case.
If the account holder has passed away, any monies owed become part of their estate, so the person who inherits is entitled to reclaim (let the executor know too). If there's no will, this follows the rules of intestacy. Yet it's worth noting there may be problems proving what happened at the time of the sale if only the policyholder was present.
If someone you know needs help with their finances, and they're capable of instructing you to act on their behalf, it's worth trying.
If the person has a mental health condition, or other issues that mean a packaged account was obviously unsuitable, they are more than likely to have a case.
No. You have a right to complain and take it to the ombudsman. They can't put the fact you've complained on your credit file.
Past ombudsman rulings show they can't hold it against you. The one negative is the bank will know this information when you apply for another product from it (not any other bank), and it could decide to incorporate that, but past experience shows this is unlikely.
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If your bank rejects your complaint, don't assume that's the end of the matter. You have a right to take any complaint it's turned down to the independent Financial Ombudsman Service.
This is the official body for settling disputes between individuals and financial companies. It's a free service that acts as an impartial adjudicator. Present it with the facts, and it'll decide whether your account and the circumstances under which it was sold were unfair, then decide what redress is required. In most successful mis-selling cases, this means a refund.
Note. If you wish to escalate your case to the ombudsman then there is a time-limit to how far back your case can go. The key rule is you've EITHER three years from when you knew you could make a complaint, OR six years from the event you're complaining about taking place. So, if your case goes further back than these two timescales, then the ombudsman may determine it can't deal with your case.
Complained using our free online tool? If you complained to your bank via Resolver, it'll help escalate your complaint too. It will prompt you to contact the Financial Ombudsman Service after eight weeks if your complaint's rejected or you don't hear back – and will help you draft and send the escalation email too.
If you didn't use Resolver, then to escalate your complaint you need to fill in the ombudsman complaint form below, you can send it back by post or fill it in online. Also enclose any paperwork to back up your case.
It's important to note it won't look at your complaint until you've contacted your bank and given it eight weeks to respond, if you've been rejected.
For general guidance, as with the first letter to the bank, which you could always copy and paste into here, don't feel you have to be formal. Explain the point clearly, concisely and honestly, all in your own words, just as if you were explaining the situation to a friend.
It's simple to fill in, though take care. If you need help filling this out, you can call it on 0300 123 9123 or 0800 023 4567, and it'll guide you through the claim, or use our step-by-step guide above. It's written in Microsoft Word so you can easily cut and paste sections or print it and have it next to you as you're filling in the ombudsman's form.
The ombudsman will send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.
Sometimes this will take a long time, possibly around a year, but may take even longer. But don't worry – you can leave the matter to the ombudsman to resolve and it will contact you with any offers from your lender. However, around two-thirds of its cases are solved within three months.
The ombudsman's decision is usually made by an assigned adjudicator, but if you disagree with the result, you can ask for a formal decision to be made by one of the official ombudsmen at the service. This usually takes several months as it involves a detailed investigation, but don't be afraid to push your complaint further if you think the initial decision isn't right.
After that, while the bank must accept the ombudsman's decision, you still have the right to take the company to court if you don't agree with the result.
It's also worth noting that if you feel the ombudsman hasn't handled your case correctly – for example, there have been unnecessary delays – you can ask for a senior manager to review it. If that doesn't resolve things, you've a right to go to the Independent Assessor (this can only be about quality of service, not the actual decision made).
For other complaints the ombudsman can help with, see the Your Financial Rights guide.
Unlike PPI, this is a very new area of reclaiming with more developments emerging regularly. Please let us know how you get on so that we can keep our guide up-to-date and help as many people as possible.