A packaged bank account is generally a current account that has a range of benefits included such as:
However, such added benefits are not "freebies" as those with a packaged account pay a monthly fee for the benefit, typically between £20 to £40 per month.
The Financial Services Authority (FSA) has said that around one in five adults has a packaged account, which therefore puts the number of these accounts into the millions.
New Rules
The sale of packaged accounts by banks and building societies has been a source of concern for the regulator for some time. It wants to ensure they do not become the latest case of widespread mis-selling, following the payment protection insurance (PPI) and overdraft charges sagas. As such a new set of rules are being introduced at end of March 2013, under which banks and building societies will be required to:
Does this mean that packaged bank accounts have been mis-sold?
For many the answer will simply be yes. The banks and building societies have therefore clearly failed to sell these packaged bank accounts on a "case by case" basis but instead have sold them on assuming that "one size fits all" (each benefit will be applicable to all customers). As we have learned from the payment protection insurance debacle this simply is not the case. It is therefore inevitable that many customers who have a packaged bank account will not be eligible for some of the benefits that it provides.
The other question that has to be asked is whether packaged bank account holders are getting the best value for money. Which? have claimed that they have researched this point and have found that on many occasions it is actually cheaper to shop around for the benefits and not pay for the pleasure of having a packaged bank account. If the banks and building societies have not explained this to customers (and let's face it they have not) they have mis-sold.
What should customers do now?
Anyone who has a packaged bank account should check how much they are paying for this and exactly what they are getting. In doing this they should satisfy themselves that
1) they are actually eligible for the benefits offered with the account (for example if insurance is included they may not be eligible if they are self-employed or over a certain age) and
2) that they could not buy the benefit cheaper elsewhere. If the conclusion is that they are not eligible for something or indeed if they could buy it cheaper from another source then in these circumstances the customer has been mis-sold the bank account and they should complain immediately.
Some banks have also automatically transferred customers to a packaged bank account. This is not allowed and anyone in this situation should complain immediately.
Youandyourrights.com is the free legal and money saving advice website founded by Dean Dunham.