Packaged Bank Account facilities started off costing just a few pounds per month, but these were in relation to small account facilities where the Banks were just “dipping their toes in the water” in establishing if they could end the menace of the fee free account, which they have wanted to do for decades.
The Banks then became greedy and started to add different products to justify the Packaged Bank Account facility charge. They started to apply fees which totalled anywhere between £10 and £30 per month.
Of course, the Banks are extremely good at promoting products to justify them to their clients. If anybody goes in front of them, they are very adept at making sure they leave with the product that they are trying to push onto them, and so a variety of ways for them to promote the Packaged Bank Account facilities was developed.
The most important aspect is that the fee is explained on a monthly basis and it is not annualised. The majority of people work on how much something costs. If you are told that something costs £15 or £20 per month, the Bank can justify it by saying that it is no more than buying a paper each day, or that is no more than the cost of operating a telephone line and broadband. Unfortunately, what they do not do is annualise the cost, because if they annualise the cost, people would question it more, of course. Annualised costs of £15 or £20 per month is around £200 plus in direct fees, lost interest and other costs and charges that could have been incurred as a result of having the particular account.
Therefore, we find ourselves in a situation where the Banks have mis-sold Packaged Bank Accounts. The costs attached to having the Packaged Bank Account facility can run from anywhere between £200 and £400 plus per year. This is a considerable sum of money, particularly if it is an account that you are not utilising the benefits for.
The benefits associated with the Packaged Bank Account facility range from travel insurance through to reduced memberships to the National Trust. Of course, on the reduced memberships to the National Trust, it only applies once. So, whilst this seems like an extremely good benefit, it has a limited shelf-life. In addition, the Banks also justify the selling of the product by suggesting that you get cheap loan and credit card facilities or cheaper mortgages. However, Banks agree to lend to clients on facilities which are relevant to their own personal financial situation. Therefore, the vast majority of people would qualify for the reduced rates, regardless of whether they have an account or not.
A customer, certainly nowadays, would shop around to make sure they are getting the best deal in any event. If the Bank are not able to offer competitive interest rates, regardless of whether a fee is being paid for on an account or not, then it is quite simple for the customer. They will simply “up sticks” and go to either a current account provider who does provide those facilities at a cheaper rate, or go to another third party to provide the loan or mortgage finance.
With the current level of 11 million accounts in operation, and people paying huge sums of money to the Banks each month (and of course annually), the Financial Conduct Authority has highlighted the mis-selling of the Packaged Bank Account facility and many people (running into the thousands each week) are now challenging whether their facility was sold correctly, or not.
If you have a Packaged Bank Account facility, we would be delighted to check whether the product was sold correctly, or not. We do all of this on a “No Win No Fee” basis, where if there is no refund, there is no fee to pay.
Our fee is only charged if a facility is established as having been mis-sold, in which case the vast majority of our clients’ refunds fall between £1,500 and £2,500, depending upon the length of time that the account has been in operation. Of course, some refunds are lower and some refunds are higher than this figure, but it gives you an understanding that refunds are being made on a regular basis.