Packaged bank accounts - have you been mis-sold?

Market data suggests that one in five of us holding a packaged bank account have been mis-sold the account. But what is a packaged bank account and do you have one?

Exchange Money Conversion To Foreign Currency (1)

A packaged bank account is where you pay a monthly fee for a number of products or services that bundled in with the bank account. Typically, these can be £5 to £35 a month and a typical package could include a flexible overdraft, travel insurance, mobile phone insurance or subscription to a film rental service.

If you have any concerns about mis-sold packaged bank accounts, why not raise your complaint free via Resolver

The most common contents of a packaged bank account are insurance products.

Mis-selling problem

A survey undertaken by YouGov last year found that 20 per cent of packaged bank accountants were mis-sold them. That’s a scary number, but at least 80% of those with these accounts have something that is suitable for them and are receiving great value.

There are 62 million current accounts in the UK. Of those, 8.7 million are packaged accounts. And if a fifth of those were mis-sold, that means there are 1.7 million customers who have been missold a packaged bank account. If consumers have paid for these for two years, then that’s a potential £520 million that account holders have been overcharged.

The Financial Ombudsman Service now receives around 4,000 cases a year and this number is continuing to rise.
Is a packaged account right for me?

Most packaged accounts offer good value and provide a good selection of services but it is important that you make the most of the benefits. For example if it includes travel insurance, then don’t go and buy travel insurance separately.

Work out what you get with your bundle. How many of the bundled products would you normally want? How would the costs compare with the packaged account? If it is cheaper to buy separately, you should cancel your packaged account.

How do I know if I have been mis-sold?

There are a number of scenarios that can be identified that would mean you have been missold the packaged bank account.

Being told it was compulsory: in order to get another product, you may have been told you had to buy the packaged account (e.g. to get a particular mortgage you needed to subscribe to the packaged account
Not eligible: if there are product in the package you are not eligible for, such as a travel insurance policy you were too old to be covered for
Pushed into it: if the sales process was pushy and you were pressured into buying the product or the costs were not fully explained to you
Cost was increased: and you were not made aware of this
Not aware: you are paying fees that you were not made aware of at the time of purchasing or that you needed to register your products e.g. your iPhone in order to make a claim;
Unable to cancel: you tried to cancel the product and were told that you could not cancel it;

If you have been missold then you are entitled to make a claim. This will be based on the amount that you were mis-sold by plus interest at 8%. Therefore if you have paid £10 a month for 36 months, you would be entitled to £360 plus interest. As a minor point it is worth noting that on the interest you are paid it is subject to income tax, the same as you have on your savings.

What to doYou need to contact your bank or the bank you used to be with to lodge a formal complaint. Explain why you feel that you are entitled to a refund. Provide any evidence that you may have, although you are probably going to have a limited about of written information supporting your claim as most information will relate to the person who sold you the package.

When preparing your communications, consider whether or not you were treated reasonably and fairly. Explain the situation simply – you do not have to try and speak in legal jargon or to use overly formal terms.

How far can I go back with my claim?

It is best to make a claim for something that is live, or has been within the last 6 years. After this point you pass the statute of limitation. You can still claim, but the bank does not have to keep any records and there is a lower chance of success.

What if the bank rejects my claim?

This does not mean your claim is invalid, it simply means the bank/building society does not agree. This is what the Financial Ombudsman Service is there for. Eight weeks after submitting your case to the bank, you can send your case to the Financial Ombudsman Service.

The Financial Ombudsman Service is an independent organisation there to assess customer cases rejected by the banks and to determine if they feel your case has been dealt with correctly and if the banks approach is fair and reasonable in the way that they sold it and the way that they dealt with your issue.

For a simple and easy way to complain about over 28,000 companies, go to www.resolver.co.uk or download the iPhone app.