When considering if your packaged bank account charges are fair, it all comes down to suitability. If the extra insurance products bolted on are not right for you, the chances are that the account is not suitable and you have a strong case for mis-selling.
Unfortunately, these accounts were sold in an era which was totally sales driven – meaning the banks were putting their own interests above yours and mine. Disgruntled bank employees have shown how they were given sales targets to meet for these accounts, and failure to sell on their part was met with significant reductions in their monthly salaries and bonuses. Given this culture, it’s no surprise some salesmen’s priority was to sign up as many customers to a packaged bank account as possible, with no regard for suitability. Nobody can do their job properly if they are put under that kind of pressure.
Were you eligible to claim under the bundled insurance policies?
The bank had a duty of care to check at the point of sale that each element of the packaged insurance would be usable, should a claim arise. The critical point here is that it’s not enough for the bank to simply say that they passively gave you information. Without investigating your circumstances properly it’s highly unlikely that they could assess what was right for you. For example, did they know whether you drove a car? If not, how could they possibly confirm that the breakdown cover was appropriate? Without this check, in a very crafty way you have effectively been sold an insurance product that was of no use to you whatsoever. Even if you did have a car, it would still need to be established that you did not already have break down cover with another provider. Again, without that information if you were already covered you would be paying for a duplicated insurance product that was surplus to your requirements. It should be remembered that despite these accounts sounding quite innocent, and maybe even an attractive package, you are being quite cleverly sold a couple of insurance products. With this in mind, in selling insurance the banks really needed to know you, their customer. Take another example : what level of cover did you require, and did you have a pre-existing medical condition that might affect your eligibility to claim on the travel insurance. Quite quickly it becomes clear that one size does not fit all people. For insurance to be appropriate it HAS to be tailored to you, and your circumstances. It cannot be packaged easily on a mass sale basis.
As a minimum to have any chance of being suitable the bank would have had to check that you qualify for each policy within the packaged bank account, and confirm that you met the qualifying criteria. Questions should certainly have been asked about pre-existing medical conditions, as the small print imposes very strict rules on such conditions, normally resulting in a claim being rejected. There is obviously a great risk being passed onto the customer, as he or she is under the impression that cover is in place when in fact there was never any chance of being able to claim. This all happens just at the point when you need the benefit the most – when you are in trouble. The last thing that anyone wants is to make a claim when experiencing an unfavourable life event, only to find the claim rejected under conditions written into the small print. So, we’ll say it again – i should have been established that you were eligible, and then for each element of the insurance you HAD to be enabled in making an informed decision as to whether the cover met your needs. And this was important too – vitally important: it was a requirement for the bank to highlight the availability of a non-packaged bank account. As you can see, there were many possible ways in which the banks failed in their duty of care. It would only be after all this information was assessed and disclosed that the suitability of the account could be confirmed, anything less would just be the bank hoping for the best.
Details and terms of insurances need to be properly explained to customers
Even if you were eligible for some or all the added-in parts of the package, without having the small print (terms and conditions) pointed out it would be difficult for you to make a truly informed decision. These conditions can be complicated to understand, so the sad reality was and is, you are only likely to be aware of them at the time of a claim, at which time you discover to your horror that you are caught out by them. It’s important to know how much cover you have and any excesses that are applicable.
Let’s take another example: was the packaged cover sufficient to cover more expensive smart phones, and were you made aware that you had to register the phone? Perhaps this was just hidden in the small print. If the cover was not sufficient to cover YOUR phone, you have you been paying for insurance that was not appropriate for your needs. Maybe even that limited cover was not activated because the bank did not make it clear that you were required to register the phone.
Despite the terms and conditions not being the most exciting read in the world, they will have information about the level of coverage. Commonly this minimal, and extremely difficult to claim on. The trouble is, without spending a considerable amount of time reading through all that small print information you would be none the wiser, and therefore assume that you were covered. The bank had a duty of care to make sure that the information was clear, fair and not mis-leading, this certainly does not seem the case with Packaged Bank Accounts.
Sometimes the banks do get it wrong
We want to trust our banks. Many have thought that they remain a bastion of reliable information. But once again banks have shown they can get it wrong, and it’s their customers who have paid. The mass selling of Packaged Bank Accounts has resulted in the banks’ sitting on millions of pounds of customers’ money. The banks were wrong to do this, and if they mis-sold YOU a package, you can claim all those fees back, with 8% interest.