Member Article

New rules to prevent bank account mis-selling

The Financial Standards Authority has introduced new rules to ensure that customers with paid-for bank accounts are assessed to ensure that they are eligible for the insurance offered as part of the package.

The new rules are set to be introduced by the end of March 2013, following a review by the watchdog to prevent mis-selling of bank account packages.

In the UK, one in 5 adults hold an account including add ons such as insurance or discounts. These accounts can cost up to £ 40 each month.

The regulator has held concerns over the sale of packaged bank accounts for some time, and now wants to ensure that they do not fall victim of mis-selling, following the payment protection and overdraft charges scandals.

Many accounts include access to commission free foreign currency, travel insurance, mobile phone insurance, breakdown assistance and preferential overdraft deals.

The FSA is concerned that some customers have been unable to claim on these insurance policies.

The new rules will call on banks and building societies to check whether customers are eligible to claim under bundled insurance policies, check whether policies meet their needs and ensure that sales advisers alert customers to products which may be unsuitable for them.

Commenting on the changes, Shiela Nicoll, FSA policy director said: “These products are often referred to as upgraded accounts, but if you end up paying for an element you cannot claim on, it is money down the drain.

Under the changes banks will be required to write to businesses on an annual basis to encourage them to check if they are still eligible to qualify for the insurance, as some may be excluded if they have medical conditions or due to age limits.

Despite the strict new rules, the FSA were keen to stress that these accounts can prove to be a good deal for some account holders.

This was posted in Bdaily's Members' News section by Ruth Mitchell .