Packaged current accounts under fire

Posted by Ian Carpenter in Banking on 30 May 2013 - Ian is Operations Director at checkmyfile

A new mis-selling scandal could be around the corner as the Financial Ombudsman Service (FoS) reveals rising numbers of complaints about packaged current accounts.

The FoS now receives 60 new cases every week, nearly double the average number (31) of complaints last year, with a significant number based of grievances based on the products included within packaged accounts. Additional services and perks can include mobile phone insurance, car breakdown covers, travel insurance and more attractive interest rates.

Packaged accounts range in cost from £6 to £40 per month, but the Ombudsman continues to receive an increasing number of complaints about the limited cover provided by the insurance products and the restricted scenarios which would enable a pay-out. It is reported that many banks have also been switching current accounts to the paid-for services without informing customers and with no consideration for the suitability of the add-on products.

Rory Stoves of the FoS says, “In some cases customers are finding an extra charge on their statement from a packaged account after they were ‘upgraded’. Other times complaints are because people have found themselves with add-ons they cannot use - because they are too old for the travel insurance or their phone is too expensive. Customers are being sold packaged accounts by banks who are often unaware of a person’s situation.”

Those customers who pay for their bank accounts – 20% of all bank customers - should receive a yearly letter which is designed to assess whether the account is suitable for their needs and if they are getting value for money.

The banking industry seems to bounce from one crisis to another and with an ever strengthening consumer voice only a seismic shift in general banking practices will enable the banks to regain the trust of UK customers.

Ian Carpenter is Operations Director at checkmyfile, has a degree in Business Studies, and is a Graduate Member of the Institute of Credit Management. He can be contacted at ian.carpenter@checkmyfile.com

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