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Hike in packaged account complaints

Withdrawing money from a cashpoint29/1/14

By Paul McGurk

'Paid-for' current accounts have sparked more than double the usual amount of complaints in the past year, with many customers claiming they were mis-sold the products.

The Financial Ombudsman Service received over 3,000 such complaints about "packaged" accounts in the first three-quarters of this financial year, up from 1,629 cases for 2012/13 as a whole.

There are around 100 new complaints about such accounts each week, up from 40 per week over 2012/13 - with 80 per cent of customer complaints upheld.

One in five British adults has a packaged account, charging up to £300 each year in return for perks such as car breakdown cover and mobile phone insurance.

Mis-selling complaints

The ombudsman said most complaints refer to the policy sale, with some people saying they did not even realise they had been sold a packaged account.

Many complained that they had been "upgraded" without their knowledge, and the charges on their accounts were unclear.

Some customers said they were not aware they could say no, with several agreeing only because they thought they had no choice in order to secure mortgage deals or loans.

Paid-for perks also turned out to be useless for some, such as travel insurance that people were too old to be able to make claims on.

Banks have already paid out £13.3 billion to people who were mis-sold payment protection insurance, with the ombudsman dealing with 6,000 complaints a week around PPI.

Increase in complaints 'worrying'

The ombudsman service spokesman said banks appear to be following its approach towards clearing up packaged account complaints rather than "fighting it all the way" as they had done with the PPI scandal.

A clampdown aiming to prevent unsuitable packaged accounts being pushed onto customers was introduced last spring, overseen by the Financial Conduct Authority (FCA).

To cut the risk of nasty shocks, banks and building societies now need to do more to alert customers when they are not covered by a policy on a packaged account, including sending out annual statements so people can check whether the account still suits their needs.

Richard Lloyd, executive director of consumer group Which?, said: "It's very worrying to see an increase in complaints about packaged accounts when new rules were introduced last year to protect consumers from being sold products that they don't need or can't use.

"The Financial Conduct Authority must rigorously enforce the rules to prevent mis-selling and take action against any bank that links staff bonuses to the sale of these products."

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