21 Nov 2024

Packaged Bank Account Confusion

Packaged accounts have been in the news of late. They have attracted attention due to the complication of additional ‘extras’ that are packaged into the account, which has resulted in the FSA publishing new rules forcing banks and building societies to check customer eligibility to claim on insurance cover before selling them a packaged bank account.

Research from Moneyfacts has found that of 19 providers that offer packaged accounts, there are over 38 different extras available ranging from death cover to preferential terms on loans to tax services.
As there is no standard set of benefits for the accounts to follow, the customer is never going to be sure they have picked the most appropriate benefits on the market.

List of possible benefits attached to packaged accounts
Cashback, Satisfaction guarantee, Rewards website, Replacement lock and key , Introductory offer to account holders, Card loss assistance, Mobile phone insurance, Exclusive offers with this account, Rewards website exclusive to account holders, Tax Services, Personal concierge, Legal Services, Identity theft help, Preferential terms in restaurants, Adviser offering financial services , Preferential terms for Buildings Insurance, Death cover, Loyalty Bonus to account holders, Account opening incentive, Adviser offering non financial services, Domestic emergency cover, Card protection insurance, Preferential terms for Contents Insurance, Gadgets or accessory insurance, Preferential terms on Loans, Preferential terms on Share dealing service, Vehicle breakdown cover, Preferential deals on Driving lessons, Medical insurance, Extended warranties, Personal travel adviser, European insurance, Identity theft insurance, Price Promise scheme, Preferential terms at selected hotels, Worldwide insurance, Preferential terms for currency, travellers cheques or other travel money ….

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, commented:

“The number and the depth of the benefits vary greatly between accounts.

“It is easy to see what you are getting with some benefits but others are more difficult. Discounted bank products or discounts at certain shops/restaurants could well be beaten by shopping around and you need to ask yourself would you buy from that store anyway.

“Even those benefits that offer true appeal should be considered carefully. Customers can find the full documentation and policy details literally run to a 100 pages, many with small print.

“The policies may make unpleasant reading as you find you are unsuitable for the insurance or the excesses are prohibitive. Travel insurance needs particular attention as cover can cease at varying ages, even breakdown cover needs to be checked as older cars can be excluded.

“Mobile phone cover sounds simple except it could cover theft but not loss, whilst damage cover may include accidental but not malicious. The number of permitted claims may vary with the value of the phone, and the level of cover for unauthorised calls needs to be considered.

“Trying to appeal to as much of the market as possible has resulted in increased chances of consumers not using all the benefits offered.

“Thankfully, there is a move in the market to more tailored benefits. Smile offers options on its account called safeguard, traveller and gadget, which would appeal separately to those worried about fraud, travel or gadgets. Similarly, Barclays Bank launched its Features Store which has packages including Travel, Tech and Home with additional options for more cover.

“This is clearly the right direction for packaged accounts; whilst customers will still need to check the small print on benefits, it will narrow the choice to a manageable level.”

Notes: RBS 100 policy pages, Halifax 90 pages, Lloyds TSB Approx 50 pages.

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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