The Financial Ombudsman receives 1,000 consumer complaints for packaged bank accounts weekly. About 25,500 customers had submitted complaints for PBA, about 45 per cent from the entire 2014.
The FOS speculates that like increasing numbers of payment protection insurance complaints in the past, claims management firms are to blame for encouraging consumers to make packaged bank accounts.
CMCs, whose business revolves around gaining a 25 per cent cut for any compensation offered by firms, raked in millions from the mis sold PPI compensation package. The financial industry had condemned UK CMCs for pushing up administration costs for banks.
Packaged bank accounts are monthly-paid products inclusive with bank accounts offered by banks that protect users by insuring their travels, mobile devices and their credit cards. They could cost between £5 and £25 monthly.
However, many consumers comment the products sold are lacking in quality. Some complained banks switched their accounts without the knowledge of purchasing the products. Similar to PPI< some elderly consumers found themselves unable to claim their benefits when age restrictions stopped them from claiming on the cover.
Barclays has set aside £250m while RBS has set aside £350million for possible packaged bank account claims.