Simon Read: Packaged accounts are back, but the extras still won't get you out of a jam


Lloyds Bank is to start selling packaged bank accounts again on Monday. The banking giant suspended telephone and branch sales of its packaged accounts back in 2012, soon after the City watchdog – then known as the Financial Services Authority – expressed concerns about the expensive accounts.

The regulator was forced to take action against the accounts – which are worth an estimated £2.7bn to Britain's big banks – after there were more than 45,000 consumer complaints about them.

The complaints centred around the high cost of the accounts and useless add-ons, such as insurance that people discovered they weren't eligible to claim against.

Back then the watchdog issued guidelines to clean up poor sales practices. Last month the Financial Ombudsman Service reported that complaints about the accounts have more than doubled over the last year and that more than four-fifths of them are being upheld.

What's wrong the accounts? Where do I begin! Let's start with the cost. Charges are between £6 and £25 a month, with the average fee at £14. That means some folk are paying £300 a year for their current account.

Millions of others pay nothing, so the question is what do you get for your cash? The attraction is the "extras". These include such things as mobile phone insurance, travel cover, and motor breakdown policies.

It's easy to look at these offers and compare them to the cost of standard policies and presume you're therefore getting a bargain. But in most cases that presumption would be far from the truth.

At best the insurance included on packaged accounts are budget cover, which means there is likely to be a high excess and lots of exclusions. The net result is that it is likely to be very difficult to make a successful claim.

And insurance that you can't claim against is as useful as a chocolate kettle. Given all that, why is Lloyds Bank returning to flogging their range of packaged accounts in branches and over the phone from Monday? The bank told me: "We remain committed to offering packaged accounts as we believe they offer real value to customers and we continually receive positive customer feedback."

However it added that it has simplified the range and withdrawn two of its accounts – Gold and Premier – from new sales.

I remain uncomfortable about them. My belief is that people should not choose a current account on the basis of extras. You should choose one according to your needs.

So if you regularly go into the red, you want an account with low overdraft charges. If you keep a hefty amount of cash in your account, you want one that pays a decent in-credit interest rate.

The fact that packaged accounts have been sold on the basis of "valuable" extras is wrong, as many of the extras simply have no value at all.

I hope that the Financial Conduct Authority has not forgotten about our concerns about the accounts. Next week it takes over authority for credit companies, such as payday lenders, but I expect it to continue to probe the products our banks try to foist upon us.

In fact I demand that it does. The FCA should take fresh action on dodgy packaged accounts and ensure that the millions who have one are not being taken for an expensive ride by their banks.


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

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
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

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam