The FSA (Financial Services Authority) is to begin an investigation into the manner in which fee charging current accounts are being sold to customers. Industry sources say the financial watchdog will bring out a consultation paper this autumn into the matter.
The results of the investigation could result in major changes to the way customers are persuaded to go for ‘packaged accounts’ which can cost hundreds of pounds a year in charges.
Pushy, commission driven staff pressurising customers
The regulator had already warned some of the banks to pay back customers who had been mis-sold accounts and also to change insurance policy terms. Consumer groups say that packaged accounts are simply unnecessary as well as being over priced. Not surprisingly they are a money spinner for the banks, and there are serious worries about they way in which pushy staff pressurise customers to open such accounts because of the individual commission the staff member earns. There are concerns that staff overstate the benefits of such accounts and mislead trusting customers. if you owuld like to compare current accounts using our handy comparison table, simply click here.
Number of ‘unnecessary’ packaged accounts on offer has doubled in 5 years
In the last five years the number of fee charging accounts (charging from £5-25 a month) has more than doubled according to data from Moneyfacts.
Packaged accounts offer a range of extras and services not normally available with regular current accounts. They offer benefits such as travel insurance, breakdown cover and identity theft insurance amongst others. Campaigners are concerned that the benefits which are the main selling point of packaged accounts are not always as beneficial as they appear. For example travel insurance may be offered to those who cannot use it because of their age or health problems. Another issue is that many customers are already paying elsewhere for the same benefits and are already covered.
Customers might be paying as much as £300 million a year on extras they can’t or don’t use, or services they are already paying for elsewhere.
The FSA has warned banks and building societies that its standards for acceptable practice still apply when it comes to packaged accounts. A spokesman for the watchdog said they would publish a document dealing with packaged accounts later in the year.
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