Packaged bank account providers ‘have more work to do’
The Financial Conduct Authority (FCA) today published the findings of its thematic review of packaged bank accounts.
It estimated in 2014 there were over nine million packaged or ‘added value’ accounts where you pay a monthly fee, usually between £5 and £15, in exchange for a bundle of benefits put together by your bank or building society. Having one can give you preferential deals on other products offered by your bank such as savings, mortgages, travel insurance, or mobile phone cover.
In recent years packaged accounts have come under fire, with customers claiming they were mis-sold extras.
In 2013, the FCA introduced new rules on packaged bank accounts which were designed to help customers understand whether the product was right for them.
Firms are now required to establish and record whether customers are eligible to claim for each of the insurances in the package. They are also required to send annual statements, prompting customers to review their eligibility and whether the products continue to meet their needs.
While the FCA said the new rules around packaged bank accounts have raised standards in the market, and it believes these accounts can provide “good value and convenience”, it said firms have more work to do on sales and complaints handling.
It noted that eligibility checks for travel insurance had improved, but firms need to do more to check and record eligibility for other insurances, such as gadget insurance and motor breakdown cover.
And following a sharp rise in complaints from customers who believed they were mis-sold to, the FCA’s review found that “too many did not get the right outcome”, supported by the number of complaints the Financial Ombudsman Service upheld in late 2014.
Jonathan Davidson, executive director of supervision – retail and authorisations, said: “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.”
The FCA has written to all firms involved in the review to provide individual feedback from its review.