Surge in packaged account complaints

Tom Wilson
29 January 2016

Complaints about poor-value packaged accounts soared to new heights in 2015, with the Financial Ombudsman Service (FOS) saying it’s already received 53% more new cases in the last nine months than it did in the previous 12.

In total, the FOS received 32,720 new cases between April and December 2015, compared to 21,348 between April 2014 and April 2015. Over two years the surge is even more apparent – despite three months’ figures to arrive, 477% more people have complained in the last nine months than in the whole of the 2013/14 tax year.

Three times as many people complained about packaged accounts than standard bank accounts, even though the products are less widely used. And the ombudsman was far more likely to rule in the customers favour with packaged accounts too, upholding 32% of complaints, compared to just 12% for standard current accounts.

The surge in disgruntled packaged account customers is likely because people are paying high charges for services they don’t want or need, according to Matt Sanders, spokesperson at

“In principle there’s nothing wrong with added benefit or ‘packaged’ bank accounts, as long as they represent good value and customers actually benefit from the features they provide,” he says.

“However, in many cases people simply do not use the benefits they are paying for, or in some instances were sold accounts when they were ineligible for some or all of the benefits offered. This means many people have been paying for an account that’s completely unsuitable for them.”

The ‘high interest’ account paying 0.75% - with a £480 fee

In some cases the charges are so high that it’s hard to see how they could offer value for money to anyone.

Take the Mayfair ‘High Interest’ Current Account from Lloyds Private Bank. It costs £480 a year, and the interest rate isn’t impressive either – 4% AER on balances up to £5,000, and 0.75% on the rest.

Admittedly, it’s a private bank account, so it’s aimed at wealthier people than the most of the packaged accounts looked at by FOS. You need either a £2 million initial deposit, or a £500,000 income a year to have one. If you can meet that, you’re most likely in the 45% tax band, so you’ll need an average balance of around £95,000 before you start getting any interest above the £480 annual fee.

That hardly seems like good value, considering the same balance would earn £2,470 (£1,358 after tax at 45%) in the best one-year bond.

A spokesperson for Lloyds Private Bank says customers are paying for the service, rather than the perks with this account: “Our Mayfair offering is a personalised, relationship based banking service where individual Private Banking and Advice Managers take care of every aspect of our customers’ banking needs.

“There is a monthly fee of £40 to benefit from this one-to-one banking service; this is not a monthly account fee. This fee is waived if customers hold an investment portfolio with us.”

How to find the right account?

Each week we round up some of the best current accounts for interest rates, overdraft costs, introductory offers and customer service. 

But if you’re considering a packaged account, it’s crucial to work out how much value you’ll get, instead of getting dazzled by offers of travel insurance, phone insurance, or ‘preferential’ rates that aren’t a patch on the top deals you’ll find by shopping around. 

The best way to do that is by using midata, the comparison tool that’s been developed by GoCompare and the Treasury, as it factors in how you use your bank account, so can accurately predict how much interest you’ll get or how much you’ll be charged.

Mr Sanders explains: “Midata enables people to use the information that banks or building societies hold about them to see exactly how much better off they could be by switching their current accounts.”

“Customers simply download their midata file from their online banking and upload it to’s secure comparison service. The midata comparison tool then analyses 12 months’ worth of their actual banking data and in seconds provides a pounds-and-pence value to help people determine which account is the most appropriate one for them.”

Voting for the Moneywise Customer Service Awards 2016 is now open. We want to hear from you about your current account provider, to help other readers find the best accounts, and avoid the worst. You could win up to £1,000 by taking part, and we're also giving away 10,000 copies of the magazine. 

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