25 July 2013

One fifth of packaged bank account holders mis-sold

A record number of complaints have been received about packaged accounts, a YouGov survey revealed yesterday. Compare products and save money!

A Yougov SixthSense report released yesterday shows that more than a fifth (22%) of packaged account holders say that they have reason to believe that the accounts they purchased were not right for them. Used by 1 in 5 adults, packaged accounts have come under fire recently.

Packaged account holders pay a fee of £10-£25 a month for add-on benefits like travel insurance or car breakdown recovery, which can potentially save you money- but only if you actually want or need these additional products. Banks buy the products in bulk, and so make a profit from selling them on to customers. Add-ons can include things like travel insurance, breakdown recovery and mobile phone insurance which could potentially save you money. However, some banks offer free days out and memberships to companies, so it is a good idea to question whether you are actually saving money, or if you are simply saving money on something you wouldn't buy in the first place!

Critics say that bank branch staff are under pressure to meet targets- resulting in them selling packaged accounts to customers who will not benefit fully from having one. Some critics claim that staff put customers under pressure to buy a package account, sometimes telling them they have no other choice. Yougov's survey state that up to 1/3 haven't used the extras they pay for, suggesting that they would have saved money if they didn't have a packaged account.

Although 64% of account holders have had no problems, packaged accounts have had lots of criticism recently, with Martin Lewis from MoneySavingExpert branding them "an expensive pile of pants”.

Similarly, the Financial Ombudsman Service (FOS) has received record number of complaints from packaged account holders, some said that they had been switched to a package account without their knowledge and others said that they tried to use an extra only to be barred for reasons like the age/type of product! Since March of this year it has become regulation for banks to make sure that customers are actually eligible for the products included in their packaged account. However, it is always important to pay attention to any contact you receive from your bank, and if you notice any changes you do not think you should have, get in touch with them, as some people claim to have been ‘automatically upgraded' to a package account.

However, despite this, consumers still waste £220 million a year on overlapping insurance, insuring things twice or even thrice. Make sure you look carefully at what you are paying for, ensuring that you don't buy something that you are already covered for or something you just don't need.

Another tip is to look at the products the packaged account offers, and then to check the prices of these things using our comparison tool, as sometimes its possible it is cheaper to buy each product individually. Particularly if you are being sold something that you don't particularly want or may not use, such as retail discounts, legal telephone helplines or personal bank account managers.

Click on the links below to compare prices for popular products offered by packaged accounts:

Travel insurance (often banks ask for an annual additional payment)

Mobile phone insurance

Car breakdown cover

Home insurance