In recent times, Lloyds Bank has been one of many banks at the centre of a financial mis-selling scandal.
Customers of the bank have come forward to claim that they were mis-sold packaged bank accounts (PBA) for both its platinum, gold and silver facilities.
While this type of account type is beneficial to some people, this advantage does not necessarily extend to the many PBA holders that were not given full information, thereby preventing them from making an informed choice.
Fortunately, following a ruling by the Financial Conduct Authority (FCA), Lloyds customers who felt compelled by the bank to open a PBA, or it was unsuitable for their circumstances, can now request refunds.
If you are one of those customers and are eager to set things right, in this guide you’ll find out:
How to determine if you’re eligible for a Lloyds PBA refund, the steps you should take to begin filing for your refund and how much you could receive if successful.
What Is A Packaged Bank Account (PBA)?
A packaged bank account is a current account that comes with extra products or services, like travel or mobile insurance, or VIP airport lounge access. It is these additional goods or services that allow the bank to charge the account holders a monthly fee to use it.
How Do I Know A Packaged Bank Account Is Right For Me?
You should only open or upgrade to a packaged bank account if you need the insurances or services that are automatically attached to them.
And, even if the additional services sound appealing, you should still check if it’s cheaper to buy the insurance separately from the bank or elsewhere. To do this, simply multiply the monthly charge on your PBA by 12. For example, assuming the monthly fee is £25, then your insurance is costing you £300 (25 x 12) per year.
If you are comfortable with these insurance costs and feel it is cheaper or easier than buying the insurance elsewhere, then a PBA might be right for you.
On the other hand, if you do not need the extra add-ons, or if they would be cheaper to buy separately from another provider, then perhaps it may not be such good value after all.
How Do I Know If I Am Eligible For A Lloyds Packaged Bank Account Refund?
If you are unsure if you were mis-sold a packaged bank account, the following criteria should help you determine if you are eligible for a refund from Lloyds Bank.
- You were signed up for the packaged bank account, or upgraded to one, without your knowledge.
- You were not told that you could get a free bank account.
- You were informed that your credit score would improve if you have a packaged bank account.
- You were told that the only way to get approval for mortgages, loans or other financial products and services was to have a packaged bank account.
- You were put under immense pressure to sign up for the packaged bank account.
- You were told having this type of account would give you access to favourable financial deals, but you later discovered you could’ve had these deals as a new customer for much cheaper.
- You were not told that you no longer qualified for some of the benefits in the PBA, for example, you can’t claim on the travel insurance because you have passed the age limit required to do so.
- Your bank hiked up the monthly fee of the account and did not inform you.
- Your bank did not fully explain how much the packaged bank account would cost you.
- You tried to cancel the account, but your bank forced you to keep it.
- You were not asked if you already had those insurances elsewhere.
- Your bank signed you up for the account knowing full well that you could not claim one or more of the benefits, e.g. you were too old or had a medical condition that prevented you from using the travel insurance.
- If any of the above statements apply to you, then you may be eligible to seek a refund from Lloyds Bank.
What Can I Do To Begin My Claim For Refunds?
There are some actions you will need to take, to get the ball rolling, if you’d like to seek a PBA refund from Lloyds Bank. The key steps to get started are:
1 Contact The Bank
Lloyds Bank should be your first port of call when it comes to claiming compensation/a refund.
Since they are responsible for you seeking a refund in the first place, it is only right that you give them a chance to resolve the issue. So, make your initial complaint to the bank, to put them on notice about the issue.
It is advisable that you do this by either email or letter, so you have a written copy of your communication with the bank.When drafting your complaint, attach copies of your bank statement, if available, showing all the fees you were paying monthly.
Also, make your complaint as detailed as you possibly can.Explain what the bank told you on the day you were sold the packaged bank account. Your complaint should also include why you believe the bank incorrectly told you to open the account.
In addition, your complaint should include how you want the bank to solve the problem. You might choose the option of switching over to a standard bank account or demand for a refund of all the fees you paid. Whichever solution you opt for, ensure you write it down in clear and unambiguous terms.
It is important that your complaint is comprehensive and filled with relevant information. Do not take this part lightly, as your complaint can be easily dismissed if the details are too sparse or insufficient.
2 Get In Touch With The Financial Ombudsman
Typically, your bank will have eight weeks to respond, beginning from the date they received your complaint. If they fail to reply within that time period, or you are not pleased with the solution the bank offered, then you are at liberty to complain to the Financial Ombudsman Service (FOS).
The ombudsman will send an adjudicator to investigate your claim and sift through all the information to arrive at a decision. If you, or the bank, are not satisfied with the decision, then either party can ask the ombudsman to reconsider the complaint.
On the other hand, if you are pleased with the decision, it automatically becomes legally binding for both you and the bank. And with that, your bank will have to comply with the ombudsman decision. But if the bank refuses to act in accordance with the decision, you can then ask a court to compel them to do so.
Even though the ombudsman service is free, you will need to exercise patience as it could take a while to investigate your claim and get you a refund.
However, if you only recently found out that you were mis-sold a packaged bank, then you have three years, beginning from the date you knew you could file a complaint, to contact the ombudsman. If your case exceeds these two timelines, the ombudsman may not accept your case.
3 How Much Should I Expect As Refunds?
If you have successfully proven that you are eligible for reimbursement, you will get a refund of all the fees you paid plus interest.
For instance, let’s assume the packaged bank account cost you a monthly fee of £20 for three years. The refund would therefore be £720 (calculated as £20 x 36 months) plus interest.
However, be ready for some tussle with your bank as they may look for other ways to resolve your complaint. One of the things to watch out for is if your bank suddenly changes your insurance to now make you eligible for it. If that happens, you should still insist that your bank refunds all the fees you paid for the useless insurance coverage in the past.
Lloyds Packaged Bank Account Refunds: Conclusion
There is no reason you should lose your hard-earned money to satiate the greed of your bank.
Remember, the law holds banks responsible for how they treat their customers.
So, you are well within your rights to register your grievance and seek compensation if your bank mis-sold a packaged bank account to you.