Have you been mis-sold a packaged bank account?

If you have signed up for a so-called packaged bank account, it may be time to review your decision. Banks and building societies have sold up to 10 million packaged accounts with fees ranging from £5 to £25 a month, but not everybody is getting a good deal.

There has been a surge in complaints from disgruntled customers who found they were paying for products they could not use. Only the notorious payment protection insurance (PPI) is attracting more complaints, according to the Financial Ombudsman Service.

If you feel you have cause for complaint, you could win compensation worth hundreds of pounds.


Mixed package

Banks promoted packaged bank accounts—sometimes called “paid-for” accounts—in a bid to get people to pay for their everyday banking. They did this by by bundling together a range of extra features then charging a monthly fee for the lot.

Typical extra benefits included as global travel insurance, mobile phone cover and a motor breakdown policy. Some also offered preferential savings or overdraft rates, cashback on spending, and even free use of airport lounges.


Called to account

Packaged accounts are fine for some, but others were sold products they already had or were unable to use.

One 73-year-old woman who tried to claim on her travel insurance found the policy had a cut-off age of 70. The bank even had the nerve to reject her complaint, until the Ombudsman intervened.

It also upheld a complaint by a woman who was sold an account with motor breakdown cover, even though she couldn’t drive.


Cause for complaint?

Some 32,720 people complained about packaged accounts in the nine months to December 2015, an incredible 477% higher than the 5,667 over the entire year to March 2014.

Packaged bank accounts do not offer the compensation bonanza we saw with PPI, as the Ombudsman typically upholds just 13% of complaints.

Whether you can claim largely depends on what bank staff told you when you signed up.


When you should complain

If staff pressured you into buying an account or failed to explain what you would get and how much it cost, you may have grounds for complaint.

You may also have a case if the account features were not useful for you at the time, or if staff said you had to pay for a packaged account to qualify for an overdraft, mortgage or other financial product.

You can even lodge a complaint if you were mis-sold an account you no longer have.

Work out how much you have paid in total fees, add on 8% interest and write to your bank. If it drags its feet or you are unhappy with the response, contact the Financial Ombudsman.

You can hire a claims compensation company to pursue your case, but remember, it will take a share of any payout.


Package tour

Everybody with a packaged account should check whether it is really worth paying for those perks.

Don't rule out these accounts altogether. Banks claim to have cleaned up their act and some accounts, notably Santander 123 and Nationwide FlexPlus, may be an attractive package for some.