Packaged Bank Accounts – Was Yours Mis-sold and Can You Claim?
The PPI mis-selling scandal shows no sign of abating just yet, and now there are more reasons for the banks to be concerned about their profits. The latest financial scandal to come to light is that of mis-sold packaged bank accounts (PBAs).
If you have a packaged bank account and it was mis-sold, you can more than likely claim back your money, plus interest. This article explains what packaged bank accounts are, how they were mis-sold and how you can get your money back.
What Is A Packaged Bank Account?
A packaged bank account (PBA) is a special type of bank account that has additional perks attached to it. In exchange for the perks, the customer pays a monthly fee. That fee can be anywhere from £5 to £30 per month.
The perks attached to packaged bank accounts vary from bank to bank, but often includes services and benefits such as:
- Travel Insurance
- Mobile Phone Insurance
- Breakdown Cover
- Overdraft with reduced fees
- Gadget Insurance
- Fraud Protection
- Loyalty Rewards
- Extended Warranty
Just as PPI can be a useful product in the right circumstances, so too can packaged bank accounts. The problem is that, just as with PPI, not all PBAs were sold in the best interests of the consumer.
How Were PBAs Mis-sold?
Much of the criteria that constitutes a mis-sold packaged bank account is the same or very similar to mis-sold PPI. In short, it was either through misinformation, ineligibility or because the benefits were useless to the customer.
Here’s a breakdown of the most common forms of mis-sold packaged bank accounts:
“You Must Have a PBA in Order to Secure the Finance”
There’s really no other way to describe this one other than calling it what it is: a blatant fib. Some customers seeking a mortgage, loan or credit card were told by bank staff that they had to sign up for a packaged bank account in order to secure the finance they were seeking.
In these instances of mis-sold PBAs, the client was often told that the finance they were seeking would be declined if they did not take out a packaged bank account at the same time.
Similarly, other customers were told they couldn’t have an overdraft unless they opened a packaged bank account.
If this happened to you then it is likely that your packaged bank account was mis-sold. Banks cannot force you to take out a PBA and neither can they refuse you finance or an overdraft if you decline to open one of these accounts.
Just as happened with payment protection insurance (PPI), packaged bank accounts were often sold to people when the benefits being offered would have been useless to them. For example, having access to breakdown cover for a car could be considered a great perk, but not if you don’t drive or own a car!
When a salesperson for the bank tries to sell a packaged bank account to a customer, it is the salesperson’s duty to ensure it is in the customer’s best interest to have. In this example, the salesperson should have found out if their customer owned a car and, if so, whether they already had breakdown cover or not.
Lack of Disclosure
Whenever you’re being presented with an offer, you probably want to know everything that it entails. Nobody likes nasty surprises to be sprung on them.
Packaged bank accounts were often sold in a way that constitutes a mis-selling because the bank failed to disclose the full details of the agreement. For example, some people were presented with all the perks and benefits of having a PBA, but they weren’t informed that there would be a monthly fee in exchange for those perks.
On the other hand, some customers were told about the perks of having a PBA — however, what they often weren’t told is that they wouldn’t be eligible to use some of those perks if they ever found themselves in a position where they would need to.
One example of not being able to use a particular perk might be where phone insurance is included in the package, but smart phones are excluded from the deal. Not much good if you have an iPhone or other smart device.
More Lack of Disclosure
Another way in which lack of disclosure would constitute a mis-sold packaged bank account is with regard to fees.
Some customers have reported that they weren’t told there would be a monthly fee for the account. In other instances, customers have reported that the fees were increased over time without being informed and without their consent.
More Fibs: “ It will improve Your Credit Rating”
Some customers were told by sales staff at the bank that having a packaged bank account would improve their credit ratings. That simply is not true.
Your credit rating will remain unaffected by having a PBA.
Forced To Keep The Packaged Bank Account
Just like payment protection insurance wasn’t always mis-sold, there are many instances when packaged bank accounts were not mis-sold either. Sometimes customers took them out in full knowledge of what the deal was, what they would receive in the deal and how much it would cost them.
However, some customers have reported that they tried to close their packaged bank account in order to return to a regular current account, but were told they couldn’t cancel their PBA and had to keep it.
If this happened to you, you are entitled to make a PBA claim. Your bank cannot force you to keep an account you no longer wish to have.
The ‘Best’ For Last
This is arguably the worst way in which packaged bank accounts were mis-sold. Some customers agreed to taking out a packaged bank account because they were happy with the cost in exchange for the benefits that they would receive.
In many cases, however, the bank staff failed to tell these customers a vital piece of information. That information being that in order to become eligible for the perks attached to the account, they — the customer — had to contact each individual insurance firm and perk provider to register with them.
Many customers weren’t told this and so naturally assumed they were covered for said insurance. The shocking truth became apparent, though, when they needed to make a claim and were told they weren’t covered because they hadn’t registered!
The customer had been paying the monthly fee for their bank account and thought they had all kinds of insurance, only to discover when they needed to make a claim that they weren’t covered.
We think this is possibly the most outrageous example of mis-sold packaged bank accounts of them all.
How Do I Know If I Have a Packaged Bank Account?
The easiest way to check if your bank account is a PBA is to see if you are paying a monthly fee for it. This should show on your monthly statements. But if you’re not sure and would like to be certain, you can contact your bank and ask them if you have a regular account or a packaged account.
Can I Claim for PBA?
If you’ve been paying for a packaged bank account but you do not want or need the benefits on the account, it’s likely we can help you claim back all the money you have paid, plus interest.
If, however, you have used some of the benefits attached to the account, then it is more difficult to show that the account was mis-sold because you have used one or more of the benefits.
Will I Be Penalised If I Claim For Mis-sold PBA?
No you will not. If you make a claim for a mis-sold packaged bank account, your relationship with your bank will remain unaffected.
If your claim is successful, your packaged bank account will automatically be downgraded to a regular current account. This means you will no longer pay a monthly fee for the account and you will also lose all access to any benefits attached to the account.
So if you are currently using any of the benefits attached to the account, you will need to consider if claiming outweighs the benefits you’re currently getting. It may be that the benefits of the account are worth keeping for the fee you are paying.
If you’re unsure, you can always contact us for no obligation guidance. Our free phone number is 0800 840 7290.