Money Insider: Rules tightened on paid-for bank accounts
Friday 22 March 2013
Last summer the Financial Services Authority (FSA) published a new set rules designed to give greater protection to customers with a packaged or “added value” current account.
Under the revised proposals which come into effect from the end of this month, existing packaged account customers will receive an annual eligibility statement to allow them to check that the account remains suitable for their needs.
The FSA insists that each customer receives the annual reminder as a separate mailing. That is a sensible precaution, otherwise it could easily be overlooked if bundled in with other more general statements and marketing material.
For any new accounts opened from 31 March, banks will have to ensure that customers are eligible to claim for any insurance products included in the deal and sales staff will have to point out any features within the package that aren’t appropriate.
The new rules won’t make it any easier for consumers to compare the range of packaged accounts on the market, but at least they will know from the outset whether they meet the criteria for an insurance policy they may be relying on.
With some packaged accounts costing £300 a year, these additional safeguards are long overdue and such transparency is vital to ensure that consumers are treated fairly and not talked into paying out for unsuitable products.
It’s also a positive move because the onus is now firmly on the banks to check that the customer is eligible to claim on any of the insurance elements of the packaged account.
Whether this additional regulatory burden will force some providers to stop offering packaged accounts or increasing the monthly fees it’s too early to say, but it wouldn’t surprise me to see the latter.
Don’t tar all packaged accounts with the same brush
When the FSA announced its latest measures it provoked an outcry from consumer groups tarring all these products as little more than money-spinners for the banks.
In the past these accounts received negative press due to reports of accounts being sold to customers without their consent or without a full explanation of the benefits. While I agree that this must be stamped out, when it comes to the value of these deals, not all products are the same, far from it.
The NatWest Select Silver account at a monthly cost of £10 includes travel insurance, but only for Europe, and if you’re aged over 70 you pay an extra £50 per annum. It also comes with mobile phone insurance (one phone per account holder), ID theft insurance, five music track downloads and three DVD rentals per month.
The FlexPlus account from Nationwide Building Society, also £10 per month, looks far better value, with a wider and more comprehensive array of benefits. For starters there is a £100 free overdraft authorised facility, plus FlexPlus customers receive 3 per cent interest on credit balances up to a maximum £2,500, far more than you’ll get on most savings accounts at the moment.
By making full use of the credit interest incentive you can earn £5 per month net, which offsets half the monthly account fee in itself.
Also within the package is vehicle breakdown cover (including Home Start) for UK and Europe, plus worldwide (not just European) multi-trip travel insurance, including winter sports and travel disruption, with cover up to age 75.
The mobile phone insurance isn’t restricted to the account holder only, it covers all family members, plus you can get an extra 12 months’ warranty on eligible household electrical goods.
Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC
- 2 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 3 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 4 A third of employers never check job applicants' qualifications, survey finds
- 5 James Foley beheading: Fox news presenter Megyn Kelly annoyed by Ferguson update during broadcast about murdered journalist
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...
£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony