Packaged bank accounts – insurance you don’t want

Many years and billions of pounds of compensation for mis-sold payment protection insurance (PPI) later, customers are still being sold insurance they do not want.
This week the Financial Services Ombudsman (FSO) revealed that just over half of its new complaints are still from people who were sold PPI that they did not need.  THE FSO also revealed that non-PPI complaints were up by 45% in the first half of the year.

And the star performer in the complaints hit parade was packaged banks accounts.

These accounts cost anything from £2 a month to £25 and offer insurance for travel, mobile phones, legal issues, motor rescue. They could be good value for someone with no  insurance.
Unfortunately  the sales spiel often misses out the cost and fails to question whether the customer is already covered by household or other insurance policies that they have chosen to buy (and so do not need this extra insurance).  And in some cases the customers are too old to benefit from the travel insurance because it may cut off as early as 65.

Ombudsman complaints

More than 25,000 customers complained to the ombudsman about this in the first six months of the year (more than in the whole of 2014), indicating that many times that number have had problems with packaged bank accounts.
Customers cannot go straight to the Ombudsman before their complaint has been through the bank’s own complaints procedure and rejected by the bank.
Now is the time for bank customers to check whether they have a plain and simple bank account and if not whether it offers good value, and if not whether they were mis-sold the account.

Barclays sets aside £250m for compensation

Barclays has already set aside £250m to compensate customers with packaged bank accounts.
The Money Fight Club first rule of banking is that we should always do the research and then buy what we need.  We should not allow a friendly face to casually offer to upgrade us while we are distracted by other transactions.