On the heels of the PPI racket comes another service being offered by building societies and banks in the UK, packaged accounts, which are currently being mis-sold to literally millions of customers. The FSA is currently investigating how these products are being sold and whether or not consumers are being sold a product they are not eligible for.
New rules are being proposed by the Financial Services Authority in regards to how customer eligibility is determined as packaged accounts can cost as much as £300 per year and this is unacceptable if the customer isn’t even eligible for cover.
According to the FSA, 20% of adults in the UK currently has a packaged account but the consumer group Which? finds that at least 33% of those consumers never even use the benefits they are paying for. This adds up to approximately £240 million to £320 each year being wasted.
The new rules would mean that building societies and banks that sell this insurance in a packaged account would be required, by law, to check whether or not the customer is eligible to make a claim. As well, those financial institutions must also provide a statement annually so that there can be a review of suitability.
These accounts typically include roadside recovery and other extras such as ID theft protection. The FSA wants to ensure that customers being sold these package accounts alongside their bank accounts are actively participating in the decision of whether or not to buy the cover. As was the case with mis-sold PPI, too many packaged accounts are found to have been added without the customer’s consent.
Price transparency is also a big issue with the FSA and they are currently looking into ways to improve accounts of this nature. The problem is that customers are finding it difficult to compare standalone policies or products from other banks because prices are not transparent enough.
New rules are not in place at the moment and there is nothing yet set to be brought up for review by Government, but expect to see new governing rules in the future.
