What are the problems with Packaged Bank Accounts (PBA)?

The problems with Packaged Bank Accounts (or PBA) relate to the sales process employed by the various current account providers throughout the UK.  This problem has been highlighted by the Financial Conduct Authority (FCA) in their report in 2013.  This brought to the attention the mis-selling of these particular accounts.  The Banks are of course not unfamiliar with mis-selling, and we have seen the PPI scandal rumbling on now for a number of years.  The Packaged Bank Accounts are now not necessarily going to take over at the same volumes or the amounts not as great, but it will certainly make a considerable dent in the Banks’ profits – as they have to address their dastardly ways in the way that they promoted and sold these particular accounts.

The Packaged Bank Account market stands at approximately 11 million accounts, and the report by the FCA has suggested that a large proportion of these were mis-sold.  Therefore, if you pay a monthly fee of between £10 and £30 on your current account, there is a strong possibility that this was not sold correctly at the outset.  The Banks should have followed a clear and specific sales process in relation to the accounts in order to protect the client from having to pay for a particular facility, which did not largely apply, or was inappropriate in some way.

The Packaged Bank Account facility has a range of cover which includes travel insurance and mobile phone protection.  However, whilst this could be of use to you, there are certain aspects of the account that had to be sold in a specific way in order to protect you, as the consumer.  This protection would then make sure that the account was appropriate, and that various other options (including a fee free based current account) which should not be provided as some “poor man’s current account” alternative, which would be no good – but promoted as a viable alternative which should have no stigma attached to it.

It is disappointing that yet again the Banks have chosen to take the route of deceit and fabrication in order to justify the sale of one of their products, rather than operating within the confines of their own regulator and internal regulation which was set up to ultimately protect the client.  Unfortunately, greed (as is the case when there is any mis-selling scandal) took the better of the Banks, and they found a fantastic way to generate considerable revenue from current account customers who have been operating free accounts in the past.  As you can imagine, the Banks are unhappy about having to address this situation with regard to refunds of the Packaged Bank Account fees, but we are seeing considerable numbers of refunds to date.  We are also seeing Banks themselves are providing sizeable figures in their accounts to compensate clients who are likely to make a complaint in the future.

Although the levels of claims will not be as high as the PPI refunds due to the fact that the product has not been around for as long, and a client is only likely to have one or possibly two current accounts (whereas with the PPI refund – this was based on a number of accounts), we are still seeing refunds in the range of £1,000 to £3,000, where they incorporate not only the account package fees, but also the interest and compensatory interest on any refunds.

We work on a “No Win No Fee” basis.  Should a successful claim be made, our fee is 25% including VAT on the sum recovered.  Of course, if there are no refunds, there is no fee to pay.

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