Packaged accounts: were you mis-sold?
PACKAGED current accounts, that's accounts that charge a monthly fee, have often been sold in a misleading way.
Some customers are, or were, paying out hundreds or even thousands of pounds for insurance policies they are ineligible for or because they were told that a premium account would help them get a mortgage.
That's unfair but it is possible for people that were mis-sold to put it right by making a complaint to the bank.
In this guide, we look at who can go through that process, how to do it and how likely it is that a claim will be successful.
Who's been mis-sold and what can be reclaimed?
However, there's reason to think that many people were mis-sold these accounts.
Complaints data released in May 2014 by the Financial Ombudsman Service (FOS) shows that disputes over paid accounts have risen three fold in the past year.
Many of the complaints are about selling and most of them - almost 80% - are resolved in favour of the consumer.
When banks, or the Ombudsman, find that their customer was mis-sold they give back the fees they paid, plus interest: for example, someone that paid £12 a month for two years for an account would get back £288, plus interest.
Checklist: potential problems
When thinking about whether an account was truly mis-sold it's worth considering two main areas: how it was sold and how useful it was once it was open.
How it was sold
Accounts opened online, over the phone or in a branch could all have been mis-sold but it's worth thinking back to the specifics of the sale when making a complaint.
What was promised and which key points were made clear are important, as the examples below show.
Note that bank complaints departments will seek to investigate and could speak to staff or look at the marketing materials they were using at the time so it's important to try to be as precise as possible.
'Upgraded' without asking
Shockingly, some people don't realise they even have a paid for account until they notice the fee on their statement.
These 'upgrades' can be an error or a result of over enthusiastic and pressed bank salespeople.
Misled on the benefits
Many people were told they had to get a paid account, to get a mortgage, an overdraft or a better rate on a loan or that they wouldn't be eligible for the bank's fee free accounts.
If that was untrue - for example, the loan rate available was the same as the one new customers got - that's mis-selling.
Similarly, many people have been sold benefits like insurance products that they weren't eligible for or weren't useful. See below for more on that.
Pushed to sign up
In March 2013, the regulator bought in new rules to ensure that packaged accounts were sold with critical information available and without salespeople using high pressure sales techniques to sign up customers.
Before, and even sometimes after, this date, however, many people felt pressured into taking paid for current accounts.
Being browbeaten into buying, or to keeping an account after calling to cancel, is mis-selling plain and simple.
Packaged accounts offer a range of extra products like travel, home and gadget or phone insurance, breakdown cover and many also offer some form of rewards.
When these were sold even though they wouldn't be useful or the account holder wasn't even eligible for them, that's mis-selling.
Ineligible for benefits
The worst case scenario in this case, is people paying for insurance policies they couldn't even claim on if something goes wrong.
In that case, many people think they're covered when they're not and could really lose out as a result.
Here's a few instances where that could happen:
- Excluded because of age: many travel insurance policies have an upper age limit.
- Didn't know you needed to register: some policies, like mobile phone insurance need the account holder to register the device themselves. If the bank didn't make this clear resulting in the items not being covered, that's grounds for complaint.
- Became ineligible later: banks should review eligibility every 12 months so even those who were eligible when the account was opened and only became ineligible later can complain.
To be clear, it's fine for someone to hold a policy they're not eligible for as long as they knew about it: they key here is that many people just didn't realise they were ineligible.
Didn't use benefits
Another cause for complaint, although it's a weaker argument, is being signed up to services that, while they're technically eligible for them, the account holder was clearly not going to use.
It's not ok that consumers have been pressed into signing up for an account with breakdown cover when they don't own a car, for example.
The same goes for travel insurance when the account holder doesn't go on holiday or gadget insurance when they don't have any gadgets to cover.
Making the complaint
For packaged account holders that believe they've been mis-sold, the next step is making a complaint.
- Send a letter or make a call: go straight to the banks complaints department and set out the reasons for mis-selling clearly and simply.
- Include statements and other supporting documents: if possible by, for example, highlighting insurance terms which make you ineligible for cover.
- Expect to be contacted by investigators: they may ask more questions about the account and will likely give a final verdict on whether mis-selling took place.
Note that it is possible to make complaints about accounts that are closed. See more in this guide
Rejected? Go to the Ombudsman
Be aware that many mis-selling complaints are turned down or haven't reached a resolution after eight weeks. In that case, the next step is taking the problem to the financial Ombudsman.
There's a form on their website to fill out - here - and one of their investigators will make contact and deal with the bank.
The process can be long but they are independent and assess each case on its merits.