What are Packaged Bank Accounts?

A Packaged Bank Account (PBA) is an account facility which has been operated by all of the major High Street Banks.  It was developed approximately 15 to 16 years ago as a way for the Banks to operate a current account market in which they could obtain a monthly fee for that current account.

For many years the major Banks have tried to find a way to charge clients for the operation of their current account, but have been unsuccessful.  The Banks do not believe that they should have to operate any free accounts.  In some ways it is understandable, as they are independent businesses, therefore – why should you provide something that is free?!

As a result of the Banks not being able to charge for current accounts, they have adopted an attitude, which has perhaps caused the majority of the scandals that we have seen in recent years.  Their attitude is that they will always portray themselves as offering free services, but they will always look at making money from you in whatever shape or form.  Therefore, rather than being open and honest and saying “here is an account and this is how much it costs”, they go around the back door and sell products and services which are irrelevant and costly in order that they can generate revenue.  Ultimately the client loses out.

Packaged account facilities are offered with a monthly fee charged in the region of £10 to £30 per month.  For this fee you have an account with a fancy name such as “Select”, “Gold”, “Platinum” or some other compelling name that helps to justify the fee.  The account then has a variety of bolt-on benefits which are employed to justify the costs.  However, most of the bolt-on benefits are largely inadequate as they are watered-down versions of actual policies that are available, and which you might already have.  This includes roadside assistance through to mobile telephone cover – many of which you have independently, in which case the Bank has duplicated this cover which you may already have as part of other products, such as home insurance.

The Banks have been mis-selling this particular product for a number of years.  This has been highlighted by the Financial Conduct Authority (FCA) who stated that the way that the Banks have promoted these products was not one of making an offer, or making available current accounts to its clients, but one of selling the product.

Unfortunately, in selling the product they have sold it incorrectly by not establishing whether the account was relevant, cost effective or indeed wanted by the client.  It was sold as a “one and only” option to them, or if they were offered a free account (which many people were not) then the client was made to feel that they were thrown into the depths of financial despair as a result – where only the lowliest of society would ever have a free account.  All of which is incorrect and all of which is wrong.

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