10/04/2011
By Chris Torney
The City regulator is investigating banks which charge customers monthly fees for accounts that come with perks such as travel insurance and commission-free currency exchange.
The Daily Mail newspaper reported that the Financial Services Authority (FSA) had been reviewing the market for packaged current accounts to see if they represented good value for money.
Packaged accounts can cost as much as £25 a month, and also come with extras such as protection against identity theft fraud, motor breakdown cover, and access to cheaper mortgage rates.
The FSA is reported to have taken action against one bank for mis-selling one of these accounts, and ordered it to refund the customers in question.
This could be because the individuals already have the insurance or other protection included with the accounts, or because they would not be able to benefit from the cover.
Packaged accounts have long come in for criticism due to questions over the perceived value of the extras.
For example, annual travel insurance policies can be bought individually for much less than the account costs – and there is no guarantee that such insurance offers as comprehensive cover as the best policies on the market. There may also be important exclusions.
A spokesman for the FSA said the watchdog was aware that packaged accounts did not suit everyone, and added that a full investigation could follow later in 2011.
