Packaged bank accounts are accounts for which you pay a monthly fee, but you are provided with an assortment of benefits as part of the package as an incentive. Over the last few years, these types of accounts have featured in the news and online money advice sites as sometimes having been mis-sold.
In 2020 alone, over 25 thousand complaints were made by disgruntled packaged bank account holders whose packaged bank account benefits were rendered essentially useless by the coronavirus pandemic. With issues like this and a history of mis-selling, many customers have been attempting to claim back the large sums of money they may have been charged. In this article, we take you through a breakdown of what to expect from a packaged bank account, its benefits and possible failings.
The Benefits of a Packaged Bank Account
When you sign up for a packaged bank account, you are offered benefits such as an assortment of insurances, often including:
● Travel insurance
● Mobile phone insurance
● ID fraud insurance
● Car breakdown insurance.
Other benefits you may be offered as part of the package could be:
● Foreign currency with no commission charged on the exchange
● An overdraft that is interest-free or with very low interest.
Different banks and building societies may offer other benefits as part of their package to tempt the customer — for example, a year’s free membership to tourist sites or airport lounge upgrades.
Some banks and building societies offer benefit packages that are more advantageous for older customers, while others are more tailored to families. Packaged bank accounts can be successful for some account holders, but customers need to be fully informed to make the best choices for their financial needs.
The Disadvantages of a Packaged Bank Account
The bundle of benefits listed may seem very tempting and could save you money if you need them. However, they may not always be quite as good as they seem at first. You will need to think about whether or not you need most of the benefits on offer or if the fee you are paying for your packaged bank account is worth the free benefits.
You may already be covered for your mobile phone, for example, as part of your house insurance, or you may find that the parts of the package that you actually need can be purchased at a lower price. In this case, a bank account with no fees would be a better option.
What Is Mis-Selling?
Some years ago, employees were very much encouraged to sell these packaged bank accounts, which led to some over-enthusiastic selling that may have amounted to persuasion. This could be counted as mis-selling.
Some customers found that when they attempted to make a claim on their travel or life insurance, they were not eligible, due perhaps to prior health problems or age. This would also be mis-selling since it is the duty of the bank or building society to check if the benefits offered are suitable for the customer.
Occasionally, customers have been told inaccuracies — that they needed a packaged bank account to qualify for a mortgage or an overdraft, for example. And some have even been “upgraded” to a packaged account without their consent or full understanding. This type of mis-selling can be challenged.
How Much Might You Be Entitled To?
If you feel that you have been mis-sold your packaged bank account, you need to cancel your account and make a claim to the bank for all the fees that you have paid while the account was active, plus 8% interest. You could be refunded thousands of pounds if you opened your account over a decade ago.
What to Do if You Believe You Have Been Mis-Sold a Packaged Bank Account
If you feel that you have been mis-sold a packaged bank account, your first action should be to contact the bank or building society to allow them to put the situation right. Put your complaint in writing either by email or letter as evidence. Keep copies and state how you want the situation to be resolved.
If you feel reluctant to handle the situation yourself, you can get in touch with a claims management company that will use their experience to deal quickly with your complaint and relieve you of the burden.
The Financial Ombudsman Service (FOS)
If the bank does not get in touch with you within eight weeks of your mis-selling complaint or if the complaint is not resolved to your satisfaction, you can contact the Financial Ombudsman Service. This independent body will look at the mis-selling complaint and decide on a fair resolution for all the parties involved.
Interesting Related Article: “Why is the Banking Sector the Most Vulnerable Sector During the Crisis?“
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