Package account providers still have “more work to do” to improve sales and complaints handling, according to a review of the industry by the financial regulator.
In 2013, the Financial Conduct Authority (FCA) introduced new rules on packaged bank accounts, which are paid-for current accounts that come bundled with added services, such as insurance products.
These rules were designed to help customers understand whether the product was right for them, after banks came under fire for pushing these expensive accounts on to customers who do not need the benefits or who would not be able to claim on the insurance.
Firms are now required to establish and record whether customers are eligible to claim for each of the insurances in the package, as well as send annual statements prompting customers to review their eligibility and whether the products continue to meet their needs.
But the FCA says that while these new rules have raised standards in the market, firms have “more work to do” on sales and complaints handling.
In particular, the review found that firms need to improve how they check and record eligibility for insurance other than travel insurance, such as gadget insurance and motor breakdown cover.
Too many customers who complained about being mis-sold packaged bank accounts in late 2014 also did not get the right outcome; a finding the FCA says is supported by the number of complaints the Financial Ombudsman Service upheld in that period.
As a result, the FCA has written to all of the firms involved in the review asking for feedback to be provided (the FCA is not naming these firms). It has also warned companies that weren’t involved in the review to consider whether any of the issues identified apply to their own businesses, and to take action where necessary.
Jonathan Davidson, executive director of supervision – retail and authorisations, says: “We continue to believe that there is a place in the market for packaged bank accounts, as they can provide good value and convenience for consumers.
But we expect these products to be sold fairly and for customers to have the information they need to make an informed choice.”
The FCA is now undertaking a further review of more recent complaints on packaged bank accounts to check that firms have since raised standards.