Spike In Customer Complaints Over Packaged Bank Accounts

Complaints about useless packaged bank accounts during crisis have soared

Over 25,000 people have made complaints to their bank about their current account’s packaged benefits, which for many have been rendered pointless during the Coronavirus pandemic in 2020.

Customers have formally complained in their droves because they were either paying for extras they were unable to take advantage of, or they didn’t realise they were paying for them at all.

The complaints website Resolver has revealed that 25,043 complaints were sent in over the last year. Many of those complaints were about the extras on a current account which usually include services like travel insurance, which wasn’t useful to customers who were barred from travelling international during COVID-19’s emergence.

Mis-Selling Controversy

Before 2020, the number of complaints around packaged bank account benefits had been dropping year-on-year after the banks were punished for mis-selling them previously. Many banks had to refund customers with interest against mis-sold packaged current accounts. That’s why the 2020 spike stands out so much.

Various other benefits that are commonly included with a packaged current account include breakdown cover which can be used internationally, and Avios points – rewards earned for spending on flights, hotels and car hire. Again, these services were not of use to any customers in the UK during 2020 barring a couple of months out of lockdown and some who were required to travel for business, many of whom couldn’t then claim personal benefits without breaking employment laws.

Despite the increase in complaints made by customers, very few were upheld by the Financial Ombudsman when they reached that stage.

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    Figures show that 3,193 enquiries were made to the Ombudsman between July and September with 1,522 cases then taken on. Of those that were completed, only 5% were upheld in the complainant’s favour. These statistics cover all complaints, not just those around packaged bank accounts.

    Example Benefits

    As an example, NatWest’s Premier Reward Black current account charges £31 a month to customers to access the range of benefits. These include worldwide family travel insurance, breakdown cover for both the UK and the EU, access to airport lounges, a 24/7 concierge service and rewards on direct debits.

    Despite the £372 annual fee, most customers won’t have been able to use the travel insurance, EU breakdown cover or airport lounge access for most of 2020, and the UK breakdown cover will have been limited by the stay-at-home instructions during the more intensive lockdowns too.

    Many customers may also be caught out by the age limits applied to benefits such as travel insurance. HSBC’s Premier account includes travel insurance that expires when the customer reaches 69 years old, while Barclays are a little more generous with their Premier travel insurance expiring when a customer reaches 79.

    The terms and conditions of these accounts need to be considered carefully, especially for any insurances and incentives included as these may have conditions or restrictions.

    Katie Brain, Defaqto