'Mis-selling' fears over packaged bank accounts
Claims industry is gearing up for a lucrative new round of legal battles
Sunday 16 December 2012
The "no win, no fee" industry is gearing up for a new year assault on Britain's banks over the sale of packaged bank accounts.
Lenders such as Barclays, Lloyds Banking Group and HSBC have already paid out billions of pounds in compensation to customers for mis-selling products, most notably for payment protection insurance and interest rate swaps.
Fears are now growing among senior bankers that packaged bank accounts will be the next target, with the Financial Services Authority (FSA) publishing new guidelines on Friday following a review of the market earlier this year.
The accounts, which usually include insurance cover and other benefits such as roadside assistance, are now used by more than 10 million people across the UK.
From March next year, banks and building societies will have to provide customers with annual statements setting out the qualifying criteria they need to claim benefits on packaged accounts. The statement will have to be sent separately from other documentation.
Institutions must also alert those customers who have reached the age limit for the travel insurance or who reach the limit before the next eligibility statement is due.
The FSA guidelines are unlikely to lead to historical claims. However, the claims management industry is already sharpening its knives in anticipation of a series of legal fights on new payouts.
Ryan Horne, managing director of iSmart, said: "We are delighted to see new regulations coming in which will make the banks ask customers whether they want these accounts and whether they can use the products included in them.
"We have already been able to claim back these fees on behalf of customers because they have been mis-sold – and we believe there are many people out there in the same situation."
According to recent figures from the data analyst company Defaqto, there are currently about 70 different types of packaged accounts on sale in the UK, compared with 39 in 2007.
The average charge for a packaged account is now about £15.28 a month, up from £11.80 five years ago.
Separate research from the consumer watchdog Which? has found that up to a third of customers do not use any of the benefits on offer with the accounts.
The British Bankers' Association (BBA), which has also been faced with the Libor-rigging scandal, said the industry would monitor the latest developments. The industry has been under intense pressure to salvage its reputation following a series of scandals.
"Our members have been working closely with the FSA on this issue and will be studying the paper closely to consider its implications for them," the BBA said in a statement.
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