When there is a sudden surge in the number of complaints made to the Financial Ombudsman, you know that there is a growing problem. The majority of such complaints are upheld, and the banks withdraw the problematic accounts. What we are witnessing with PBA is all very reminiscent of the earlier stages in the PPI mis-selling scandal It takes a while for the word to get out, but once it does people start to question just what they are paying for, and complaints escalate very swiftly. The general public are becoming much more astute in understanding their rights in relation to financial products. Once they understand that they have every right to complain if they have been mis-sold. This is especially so when they are paying up to £300 a year, and it’s just a matter of time before the complaint flood gates are opened.
The problem is that Packaged Bank Accounts are riddled with exclusions and catches which can render a number of claims invalid. But let’s be completely clear about this – it is just not fair that bank customers should be paying for a service that they could never have used. Common complaints include customers not knowing that they had the Packaged Account, or knew that they had the benefits but did not know that they were paying for them. Another obvious indication of mis-selling is that account holders have tried to make a claim only to find that the claim is rejected due to a pre-existing medical condition, or age limit breach. They SHOULD have had such exclusions explained to them, but often they were not, and yet they have effectively been paying a premium for non-existent cover, and that is mis-selling. You can read more about the Financial Ombudsman’s findings at http://www.financial-ombudsman.org.uk/publications/ombudsman-news/112/112-packaged-accounts.html.
Did you feel pressure to take out a packaged bank account?
With all the coverage in the news most people are aware that High Street bank employees were under pressure to reach sales targets and had to work in questionable conditions; however this is no excuse for them selling an inappropriate financial product. If you think back to the time the packaged account was set up, and you consider undue pressure was applied, then that would not be viewed as fair by the regulator, and you would have cause to claim.
Was your standard account up-graded to a packaged account without your knowledge?
The Financial Ombudsman has already found this complaint point to be a common occurrence, so we know that it must have happened quite often, without account holders knowing. The bank needed your permission to up-grade you to a fee-paying account. Without your acceptance it would certainly not be compliant: in other words – mis-sold. An important point with such ‘upgrades’ is that there would have been no way to confirm that the packaged account was suitable for your needs. If the account was up-graded without your knowledge and agreement, this should act as an immediate red flag.
Did the bank inform you that you needed the packaged bank account or another product or service would be declined?
The bank might have informed you that unless you took their packaged bank account you would be declined for goods or services you required. Again, if you have been forced to take X to get Y alarm bells should be ringing. To say the very least of it, this was a very questionable tactic because the bank was applying a lever to force another unwanted and unrequested sale.
Have you tried to claim but been rejected?
Without going into great detail about the small print, it has to be understood that there are numerous exclusions and potential pitfalls in the way for anyone who tries to make a claim under one of the bundled insurance policies attached to the packaged bank account. The Financial Ombudsman has reported that this is one of the more common complaints, so we know it’s another serious problem. There are dozens of reasons that might be used to reject a claim, but two that stand out as real barriers: being over the acceptable age limit, and having a pre-existing medical condition. If you have been turned down for a claim because of these issues, you have a very strong case indeed.
Did you actually have a need for the attached insurance policies?
It stands to reason that the bundled insurance policies connected with your packaged bank account needed to be usable in the first place. Most packaged accounts included break down cover, travel insurance and mobile insurance. Many people already have such cover. For example, many car owners were already paying for breakdown cover with their AA membership. So if any of these insurance policies were not needed you have been paying for something that you did not need. If you already had cover, if you never went on holiday, or did not have a car or mobile phone the insurance is just not applicable. Such insurance was mis-sold.
Were you offered the option of a free account, or just offered the packaged account?
The packaged account was always an option you could choose as an alternative to a free account. You should have been clearly informed that there was the possibility of not paying anything for your account as well as being told about the packaged fee-paying option. If you were only ever aware of the fee-paying opportunity then you have not been able to make a clear informed decision. The bank should have made it crystal clear that the fee-paying account was not the only account available to you.
Did you try and cancel the fee paying account but were told that you had to keep it?
These accounts were never compulsory and were always cancellable; you did not have to carry on paying a fee for your account if you did not want to. If you have had any experience of the bank telling you that you had to keep the account this would indicate grounds for a complaint. It was obviously in the bank’s interest to keep you continually paying a monthly fee, however it was not necessarily in YOUR interest.
Did the bank make it clear that you had a choice to take the account?
Similar to being given the option of a free account it should have always been absolutely clear that the choice to take the account resided with yourself. If at any point this was not felt to be the case the bank have not treated you fairly. If the packaged bank account was taken up it should have always been completely YOUR choice, not as the result sales tactic to hook you in.
Were you informed of the cost of the packaged account?
The cost of the packaged account should have always been absolutely clear, without knowing the cost you would not be able to make a clear decision. As with any goods or service, without knowing the cost, how could you decide whether it offers good value for money or should be assessed as poor value.
Did you receive a clear explanation about how the packaged account worked?
The packaged account might sound simple enough, however whenever insurance policies are sold (which is effectively what a packaged account is offering) a clear explanation should have followed. Did the bank run through details of this account and answer any questions that you might have wanted to ask? Each bundled insurance should have been individually explained to you or order to allow you to assess its value to you as an individual. Insurance is not a one size fits all product, so expecting that all aspects of the PBA bundled insurance were appropriate to all account holders was a hopeless sales pitch. Every individual’s circumstances should have been reflected upon in detail. If your PBA was sold without such a detailed investigation, you may well have cause to claim.
Did you receive a clear explanation of the packaged account limitations?
The bank should have pointed out any limitations of the packaged account as opposed to leaving you to find them buried in the small print, or after a claim had been rejected. Limitations are certainly there but if you knew about them there would have been less chance that you would have accepted the packaged account. Many customers just assume that the policies bundled under the account save them from buying three separate policies, however the cover for a single stand-alone cover is likely to be far superior in its cover than that included within a packaged account. You should have been made aware of these limitations to cover from the very outset. Were you made aware?
Were you asked about pre-existing medical conditions when taking up a packaged bank account?
The terms and conditions (small print) are extremely hard on pre-existing medical conditions. If you were not asked about any pre-existing conditions that might affect a claim, this strict limitation or exclusion could create a serious issue should you need to make a claim on one of the included insurance policies. This also creates a serious risk, as you carry on as if you are insured for a potential threat when actually you have no cover whatsoever. In such a situation the bank does not suffer as they simply refuse to pay, however the account holder can be left seriously vulnerable at a point when they need help the most. With this in mind it is essential that the account holder should have been asked about any pre-existing medical conditions before this type of packaged account was sold. The list of existing conditions the banks cite when they reject claims are numerous, and potentially affect more people than is realised. Were you asked about pre-existing medical conditions?
Did the bank explain the terms and conditions to you?
Were the terms and conditions just passed to you passively without being explained in any further detail? The bank should have drawn your attention to critical points to allow you to make a clear decision. They should have explained limits to the amounts of cover provided, in insurance policies being sold to you. The bank should have been pro-active on this front as opposed to just handing this information across.
Was your Packaged Bank Account fee increased without asking?
The bank had a duty to inform you of an increase in cost of your account, rather than just increasing the fee without your knowledge. It might be that the bank has just charged you more as and when it pleased them to do so.
Package Bank Accounts often require you to register your car or phone in order to be eligible to make a claim.
The fact that you would have to register your prized possessions prior to them being on cover is hidden in the small print. Was this pointed out at the time of the sale? The registering of this critical information is not necessarily something that you would consider when taking your packaged bank account. This certainly should have been highlighted by the bank.
Did you own a car while holding a packaged account?
The majority of packaged accounts had car breakdown cover added as a bolt on. If you did not own a vehicle this would have been completely inappropriate because you would be paying for insurance you did not need. It might be that you owned a car but already had breakdown cover through the RAC or AA leading to duplicated insurance. It stands to reason, no-one would intentionally duplicate and pay for their insurance twice.
Did you own a phone while holding a packaged account?
Similar to car breakdown cover, many packaged accounts included mobile phone insurance. If you did not own a mobile or already had insurance through another provider this would be inappropriate cover. The cover provided through a packaged account is not always wholly suitable as there can be limitations regarding the type of phone you can claim on. If you held a more expensive iPhone or Smart phone, the cover could be inadequate. Any excess you had to pay on a claim should also have been made clear.
Was there a need for travel insurance with your packaged account?
If you never travelled there would not be a requirement for travel insurance. Furthemore, if you already had stand-alone cover or were covered through your credit card it would be duplicated insurance and redundant. Maybe you have or can obtain a copy of the travel insurance, or the travel insurance cover with your credit card that ran at the same time as the packaged bank account? If you can show duplicated cover you may have cause to claim.
Packaged Bank Accounts were often mis-sold. Does your bank owe you a lot of money?