Packages bank accounts could be mis-sold
Over recent years many people in the UK have upgraded their current accounts with their banks, and have signed up to a packages bank account.
These packages current accounts work in the same way as a regular bank account, but a monthly fee is charged for the account. In exchange for the monthly fee, which averages around £15 a month, the bank account holder receives a package of benefits, which can vary from one bank to another.
However, some of the standard benefits that come with these packages accounts include vehicle breakdown cover, commission free travel money, travel insurance cover, mobile phone insurance, and preferential borrowing rates.
Over the past few years bank employees have been encouraged to push the sale of these packaged current accounts, and some consumers may have felt pressurised into taking the accounts.
Officials are concerned that in many cases people are paying a monthly charge for a packaged current account but are using very few if any of the benefits that come with the package.
This means that these accountholders could be wasting hundreds of pounds a year in some cases, and could be far better off cancelling the packaged account and buying the one or two services that they may use from the benefits from other providers on the open market.
The UK’s financial regulator, the Financial Services Authority, has now expressed concern that the mis-selling of packages current accounts by banks could get worse, as the financial losses that banks have experienced over the past couple of years could result in them putting more of a focus on raising more money on selling services and products such as packaged bank accounts.
This in turn has raised fears that many consumers could end up feeling pressured into taking out a fee charging bank account that they do not need or in some cases do not even understand.
The FSA made its warning in its Financial Risk Outlook for 2010, and officials from the agency said that whilst some people may find that the packaged account was a cost effective option that provided value for money there were many others that would end up being financially worse off because they would not really use the services but would still be paying the fees.
An FSA official said: “Packaged accounts may offer value for money for some consumers, but they may not benefit all. Consumers could be better off purchasing products individually or not at all. And some may find that where the add-ons are insurance products, they do not provide the expected level of cover.”
The FSA continued: “These products could offer good value for some consumers as they are not necessarily higher risk. However, there is a possibility that some consumers may not fully understand the terms and conditions of these products.”
Tags: Insurance, Financial Services Authority, regular bank account, packaged bank accounts, packages bank accountThe agency added: “New products are emerging which have similar characteristics to PPI. These products could be sold in ways which lead to similar consumer detriment to that experienced with PPI.”
my brother in law suffered a stroke and dealing with his finacial affairs i noticed that a £12 monthly fee was being paid from his account for AA cover Holiday insurance and so on, my brother in law has learning difficulties and cant read or write just enough to sign his name. this had been sold to him even though he was on benifit and has been for all the time with the bank can i claim this back for him as this was definately miss sold.