In 2013, the Financial Conduct Authority (FCA) enforced new rules regarding the sale of packaged bank accounts (PBAs), after establishing that many banks were guilty of mis-selling these products over a number of years to customers for whom they were unsuitable.
The FCA found that huge numbers of packaged current accounts, with the associated additional monthly or annual fees, had been recommended and sold to customers who couldn’t actually benefit from the insured services and perks offered by the PBA.
As a result, complaints about this unethical practice have been on the rise in recent years.
The good news though, is that banks can review the facility upon request and, if proven that there was a mis-sale, you can receive a full refund on the charges levied against your PBA.
However, seeking compensation for this type of financial claim can sometimes be a complicated and lengthy procedure.
If you are pressed for time, or don’t know where to start, then looking into using a packaged bank account claims company could be a smart choice.
In this guide, we’ll look at what to expect from such firms and common questions that people ask about PBA claims.
How Were Packaged Bank Accounts (PBAs) Mis-sold?
The reason why packaged bank accounts are now experiencing an upsurge in claims is that there were plenty of grey areas in how banks sold these types of accounts before 2013.
The FCA discovered that instead of promoting these facilities to individuals who would find them useful and therefore offer value for money, banks were selling them to anyone who wanted to open an account.
The nature of mis-selling occurred in a variety of ways. In many instances, information about how the additional products associated with these types of accounts worked was insufficient.
For example, it would not be made clear what an insurance cover was for, or the requirements to be able to make a successful claim.
Sometimes customers would be coerced in one way or another to open a packaged bank account or were given misleading information to make them think that it was mandatory to have one.
How Do I Know If My Packaged Bank Account Was Mis-sold?
So, how do you know if you have a mis-sold PBA on your hands? Here are some common scenarios where you are likely to have a case.
- You signed up for this type of account without being informed
- Bank employees informed you that this was the only suitable option for you, or that free accounts were not provided as an option
- You were led to believe that this type of account was required to qualify for a mortgage, loan, and overdraft services, or that it would improve your credit score
- The bank failed to inform you that you are no longer eligible for the benefits that accompany a packaged current account, e.g. exceeding the age limit allowed to claim on the travel insurance
- You attempted to close the account, but your request got denied, forcing you to keep it
- No one mentioned what you needed to do to qualify for the benefits, e.g. registering an insured phone or car
- Your bank or building society did not ask whether you already had similar insurance coverage elsewhere to the ones bundled within your PBA
If any of these situations apply to you, then you should consider filing a PBA claim.
How Can Packaged Bank Account Claims Companies Help?
Filing a claim on a mis-sold packaged bank account is something you can do on your own.
However, many people turn to claims management companies (CMCs) to assist them through the tedious and often time-consuming process of dealing with banks and other financial institutions.
Claims firms often specialise in financial mis-selling and associated irregularities. Once you contact a company to represent you, their first step is usually to assess the likelihood of you having a successful claim or not.
You may be required to furnish the firm with more details, such as your bank statements showing all the monthly fees you’ve been paying and reasons as to why you believe your bank did not sell the packaged current account correctly to you.
After all the documentation is in place, the claims company would make a full assessment and determine whether your case has reasonable prospects for success. If you are not comfortable handing over personal details to a third party, then make sure that the firm you choose complies with general data protection regulations (GDPR).
The best business practice would require you to enter into a contract with the claims management company that will be looking into your mis-sold PBA. Signing a letter of authority would then allow the firm to seek redress on your behalf, both from the bank or through the financial ombudsman should your initial claim request be rejected.
What’s more, a reliable CMC should keep you updated on the progress of your claim, including furnishing you with copies of all correspondence they have with your bank or financial service provider.
How Much Commission Do PBA Claims Companies Charge?
Financial claims companies typically work on a ‘no win – no fee’ basis. That means you should only pay for services rendered after a favourable outcome. Therefore, a trustworthy firm should not charge you any upfront fees or hidden costs if your claim is unsuccessful. Check how the firm will be paid for their services, before you sign anything.
The FCA, which is the UK’s regulatory body for CMCs, also caps service fees for these firms at a maximum of 20% (plus VAT) of your claim. These companies are also required to provide you with an itemised cost illustration.
How Much Compensation Can I Expect If My PBA Claim Is Successful?
If a mis-sold packaged bank account claim ends in your favour, then you will be entitled to a refund of all the fees you have been paying (typically £5-£30 per month). Additionally, compensatory flat interest would also be added at 8% of the amount refunded.
The average compensation amounts for these types of claims range between £1,000 and £3,000. In some cases, it could be higher or lower depending on how long the packaged bank account has been in operation. Typically, you can go back six years, but you may be able to claim for a longer period in certain circumstances.
How Do I Choose A PBA Claims Company?
If you opt to enlist the services of a claims management company to seek a refund on your potentially mis-sold PBA, it is essential that you do some due diligence in selecting the right firm.
First and foremost, you should only engage with an authorised CMC. You can ask any firm you contact for their CRM reference number and check whether they are registered with the FCA.
Using firms that are not approved can be risky, because you will not be able to access the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) if things go south.
Packaged Bank Account Claims Companies: Get Free Advice
Ending up with a packaged current account that you cannot fully use, and one that should not have been assigned to you in the first place can be frustrating (and costly!).
Claims are on the rise and banks have been made to put aside millions of pounds to compensate mis-sold PBA customers, so it is possible to seek a refund of all the monthly charges you’ve paid with the right action.
But it’s not always easy to select the right company to assist you and the legal jargon can often be off-putting if you do it yourself.
If you’d like some free, no obligation advice regarding your PBA claim, then use our online form to arrange a call with an experienced claims solicitor. They can advise you on your claim and provide the best course of action for you to take next.