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New rules make packaged accounts clearer

Rebecca Rutt
by Lovemoney Staff Rebecca Rutt on 17 December 2012  |  Comments 2 comments

The FSA is forcing banks to send out annual eligibility letters to packaged account customers.

New rules make packaged accounts clearer

Banks offering packaged accounts will be forced to send annual policy statements to customers explaining their eligibility for any insurance policies included in the account.

This is to try to ensure customers are not paying for unsuitable insurance policies and comes under new rules which will be introduced by the Financial Services Authority (FSA) in March 2013.

Packaged accounts

Packaged accounts work by bundling together different insurance policies and other features which customers then pay a monthly amount for.

It costs around £20 on average for these accounts which can include phone, car or travel insurance and other extras such as discounts on travel or yearly film rental subscriptions.

Around one in five UK adults has a packaged account, but they are often criticised because many customers are paying for insurance policies within the account which they can’t actually use.

The FSA

The FSA has been investigating these banks for a while. In July we reported about the new rules being introduced to make sure they weren’t being mis-sold to people who could not benefit from the extras included.

This included rules such as an adviser making sure a customer will be able to claim on any insurance policy they're paying for and telling customers if the product isn't suitable for them.

Banks will now have to send out a statement every year which is seperate to other mail about their account. This will detail which insurance policies a customer is eligible for, and will let people know if they have become ineligible, such as when someone passes the age limit for their travel insurance.

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Comments (2)

  • fenemore
    Love rating 251
    fenemore said

    Personally, I think you need to be close to brain-dead to sign up for one of these accounts.

    Most of the included insurance products are useless as the items covered are almost certainly included in any home-contents policy. In fact if you tried to make a claim, you will be told that they will only consider it IF you don't have home-contents cover! The best outcome you can hope for is that both insurance companies will share the cost of meeting the claim. As for travel-insurance, you can be pretty sure the bank will have negotiated the cheapest rock-bottom cover possible, from a company you have probaby never heard of - heaven help you if you ever have to make a claim.

    Of course all of this is smoke & mirrors in order to collect the monthly fee. Rather than dress it up as something beneficial, If fees are to become the norm (as they are in most other countries), then I wish the banks would just come clean and introduce a smaller fee without the "add-ons".

    Report on 23 December 2012  |  Love thisLove  0 loves
  • frazz
    Love rating 0
    frazz said

    your right some are and some are not

    however if you make a claim on your mobile ins for example on your home ins your home ins premiums will increase heavily

    the packaged do have a benefit if they are used correctly and they suit that person

    example I have had to claim twice on my phone this year 50 quid excess each time if I had done that with my home ins the standard excess Is higher but also 2 claims would rocket my policy as it is a condition of home insurance that anymore than two claims will increase the policy dramatically.

    and both times I received a replacement phone within 7 days for cracked screens some of the mobile phone insurance policy's linked to the packaged accounts are poor but it depends if your happy with it or not 7 days for new handset

    and your point about the travel insurances is incorrect they are independently rated policy's you will probably find its the same companies that the post office use if not same policy

    packaged accounts are not for everyone but for the person who uses the benefits they can save a fortune

    Report on 27 June 2013  |  Love thisLove  0 loves

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