First Direct have been operating Packaged Bank Accounts (PBA) for a number of years since the split from HSBC. Many clients of First Direct have a current account, where they pay a regular monthly fee. The account in question then provides various elements which the Bank promotes as a justifiable product that the client pays a monthly fee for, in order to operate a current bank account.
The Bank itself, in selling the product, adds a variety of alleged attached benefits which include travel insurance, breakdown cover, reduced admission for theme parks and mobile phone cover. However these are largely either irrelevant, or have been dealt with by clients of First Direct without the need for this bolt-on element to their bank account. Indeed, the Bank should establish (at the point of sale) whether the client has any other policies in place which would lead to duplication, and if this is the case, then the product would need to be flagged up as potentially irrelevant to the client. It is not satisfactory for the Bank to just sell the product without establishing all the facts as to whether the cover (which forms part of the package) applies or not.
Several years ago, when Banks decided that they wished to charge for current accounts, they decided that the best way of doing this was to promote and develop a range of current accounts with these additional apparent benefits in order to justify a fee. In this way, they were able to then justify charging clients, who were under the unfortunate belief that they had no alternative (in particular that of a free account) and as such felt obliged to take out the specific current account where a fee was charged. However, the Financial Conduct Authority (FCA) became involved in an investigation into the mis-sale of these particular facilities and since that took place several years ago, the number of complaints has increased considerably as the report found that the Banks largely mis-sold these particular current accounts.
The mis-sale of the account with First Direct happened in a number of ways, many of which was as a result of the Bank just telling the client that there was no alternative and in order to maintain their current account, that is what the fee was going to be. At no point did the Bank establish whether the product was correct, or whether the various elements of the product were appropriate, as they were required to do in order to protect the integrity of the Bank/Customer relationship. Therefore, again, the Banks have found themselves in a position where they have been found wanting and mis-selling products in order to protect their considerable profits.
The fees charged by the current account providers (in this case) First Direct, range from between £10 to £30. We are representing clients on a “No Win No Fee” basis and looking at securing a refund which contains not only the monthly fee which has been charged since the inception of the account, but also the various accumulated interest charges for that particular account based on the fees taken and also compensatory interest. The Banks are putting considerable sums aside in order to deal with the mis-selling of Packaged Account facilities and we are seeing considerable levels of complaints in relation to these particular accounts.