A Packaged Bank Account includes benefits such as travel insurance, overdraft perks and car breakdown cover for a fixed monthly fee.
Here’s the lowdown:
Why Packaged Bank Accounts?
They were designed as a value added product for loyal customers at banks, offering something extra with a bank account, allowing people to organise their finances and insurance in one handy package.
What’s the problem?
Some banks have failed to properly check whether the customer signing up for the account is eligible for all the benefits included. As a result, when people go to make a claim they can find the insurance they’ve been paying for is invalid.
How has this happened?
A lot of sales advisers in the bank were incentivised to sell Packaged Bank Accounts, which meant some of these accounts were sold to people who didn’t need them. There are a lot of ways you could have been mis-sold from being too old for your insurance or if you weren’t told you needed to register as soon as you got the account.
What’s being done about it?
In 2012, the FCA noticed some complaints coming in regarding Packaged Bank Accounts and introduced tighter regulation on how they’re sold. Reportedly, Lloyds put aside £175million, RBS set aside £307 and Barclays freed £250million for compensation on Packaged Bank Accounts in 2015. If you’ve been mis-sold, you should see if you’re entitled to compensation.
Are Packaged Bank Accounts bad?
Not at all, if you’re using all the insurance that’s included then most Packaged Bank Accounts are a really good deal. The only issue comes if you’ve not had a full explanation on what the account entails or find you’re ineligible because that’s the bank’s failure to give you all the details you need.