Money Insider: Rules tightened on paid-for bank accounts


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

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Actor Burt Reynolds last year
peopleBurt Reynolds, once among the most bankable actors in Hollywood, is set to auction his memorabilia
Gordon and Tana Ramsay arrive at the High Court, London
newsTV chef gives evidence against his father-in-law in court case

Watch the spoof Thanksgiving segment filmed for Live!
The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
i100 Charity collates series of videos that show acts of kindness to animals
Arts and Entertainment
One of the installations in the Reiner Ruthenbeck exhibition at the Serpentine Gallery
artCritics defend Reiner Ruthenbeck's 'Overturned Furniture'
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Austen Lloyd: Company Secretary

    Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

    Citifocus Ltd: German Speaking Client Specialist

    £Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

    Citifocus Ltd: Performance & Risk Oversight

    £Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

    h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

    £90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

    Day In a Page

    Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

    Christmas Appeal

    Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
    Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

    Is it always right to try to prolong life?

    Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

    What does it take for women to get to the top?

    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
    Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

    Knitting pretty: British Christmas Jumpers

    Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
    French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

    French chefs campaign against bullying

    A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
    Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

    Just what you need on a New Year hangover...

    Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
    Cuba set to stage its first US musical in 50 years

    Cuba to stage first US musical in 50 years

    Claire Allfree finds out if the new production of Rent will hit the right note in Havana
    Christmas 2014: 10 best educational toys

    Learn and play: 10 best educational toys

    Of course you want them to have fun, but even better if they can learn at the same time
    Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

    Paul Scholes column

    I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
    Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

    Lewis Moody: Lancaster has made all the right calls – now England must deliver

    So what must the red-rose do differently? They have to take the points on offer 
    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game