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
Scottish Power hit with sales ban by regulator
Dirty tricks in a divorce can cause some nasty surprises
10 tips for taking out a personal loan
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
There are 'dark corners' of the investment and pensions industry, says Pension Minister
- 1 Drugs Live cannabis trial: Hash is less harmful than any other drug, expert claims
- 2 What happens to your body when you give up sugar?
- 3 Turkish Airlines flight TK 726 crash-lands on Nepal runway in dense fog
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 The 'sex selfie stick' lets you FaceTime the inside of a vagina
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...
£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
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