Santander to close packaged accounts from October
The move, thought to affect 300,000 customers who pay a monthly fee for their packaged account, will see people lose the added benefits they pay for, such as insurance.
Santander stopped selling packaged accounts to new customers in March 2012, but has now decided to switch all customers from the packaged accounts – costing between £10 and £20 a month – to free accounts.
Reza Attar-Zadeh, director of retail banking at Santander, said: "We want to improve service for customers, and to do that we know we have to simplify our product range.
"Our view is that customers want even better service and a range of products that is easy to understand. Simplifying our current account and savings product range is an important milestone in helping our service get even better."
In March 2013, the City regulator introduced new rules on packaged accounts to prevent mis-selling, stating that banks will have to check that customers are able to claim on insurance before selling them costly packaged or 'upgrade' accounts.
But Santander was a smaller player in the packaged accounts arena, with a market share of about 3% at its peak.
The five packaged accounts affected are: Reward, Premium, Travel Reward, Family Reward and Premier 50.
From 19 October 2013 all insurance and assistance benefits will be removed from packaged accounts and customers automatically switched to the Everyday Current Account.
From 30 September 2014, the free travel insurance benefit will be removed from Santander's Premier and Premier Direct Current Accounts (these did not charge a monthly fee) and these accounts also automatically switched to the Everyday Current Account.
Customers will be contacted by Santander to remind them of the switch before the 19 October 2013 and 30 September 2014 deadlines.
A current account that charges a monthly fee in return for a “package” of additional services, such as travel insurance, credit card protection, mobile phone insurance, identity theft insurance, car breakdown cover or a “concierge service” that will book airline and theatre tickets or restaurant tables. However, many consumer experts say the features are overpriced and that more competitive deals exist elsewhere in the market and that very few packaged account holders actually take advantage of the features.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.