Packaged bank account complaints soaring, says Ombudsman
- 25 August 2015
- From the section Business
The number of complaints about so-called packaged bank accounts has "shot up", according to the Financial Ombudsman.
Some 25,500 people complained about the issue in the first six months of 2015, more than in the whole of 2014.
Packaged bank accounts offer additional benefits such as insurance and cheaper overdrafts, in return for a fee.
But many customers complained that they were sold the accounts unwittingly or they did not need the insurance.
While the number of complaints about Payment Protection Insurance (PPI) is now falling, the Ombudsman is now seeing about 1,000 complaints about packaged accounts every week.
In 2014 there were 21,348 such complaints, and just 5,667 in 2013.
Last month, Barclays set aside £250m to compensate customers who might have been mis-sold the accounts.
Packaged bank accounts are often marketed as "gold" or "premium" - and customers typically pay between £5 and £25 a month.
All the major banks and building societies have offered them over the years, in an attempt to increase their income.
Complaints fall into three categories:
- People who say they never wanted the accounts, but were signed up to them without permission
- People who asked for the accounts to be cancelled, but the bank failed to do so
- People who opened the accounts, but found the benefits were worthless (for example, their age excluded them from travel insurance).
"Pushy sales tactics have left many consumers paying a monthly bill for benefits that aren't suitable, and don't give them good value for money," said Hannah Maundrell, editor in chief of the comparison site money.co.uk.
She estimates that the average fee on such accounts is £150 a year, so the compensation bill could be large.
However, the Financial Ombudsman said the issue with packaged accounts was not "the new PPI scandal".
It said many people had actually used the benefits.
It also said that it was only upholding around 10% of complaints, as in many cases it agreed with the compensation already offered by the banks.
But it advised customers to complain directly to their bank, rather than going through claims management companies, which currently handle 80% of the complaints received by the Ombudsman.
The full list of complaints made to the Financial Ombudsman is here.