Protecting consumers from packaged accounts

Packaged accounts have become big business for the banks, with one in five of us now opting to have a ‘gold’ or similar current account.

Because these packaged accounts often come bundled with insurance products, the Financial Services Authority (FSA) has published new rules designed to protect banking customers from unsuitable sales.

Banks and building societies will be required to check whether their customers are eligible to claim on the insurance products that make up the packaged account before selling the product.

These new rules will apply from 31st March 2013.

Banks will need to check whether the customer is eligible to claim under each policy and share that information with them.

They will also need to establish whether the products are suitable for the customer and tell them if they are not. Each year, the bank will need to provide an annual eligibility statement, describing the requirements to claim each of the benefits under an insurance product.

This is a good move to ensure that customers are not wasting money. There is no sense in paying for an insurance product, as part of a packaged account, if you are unable to benefit from that insurance.

Photo credit: Flickr/VFS Digital Design