Packaged Bank Charges

“Mis-selling Packaged Bank Accounts” (PBA) – whilst not as well known a phrase as that of mis-selling Payment Protection Insurance (PPI), it is likely to get more fame (if not infamy) over the next few years as the Banks are dealing with ever growing numbers of Packaged Bank Account facilities that they have mis-sold.

The mis-selling of Packaged Bank Accounts was highlighted in 2013 by the Financial Conduct Authority (FCA).  Claims have since been growing in momentum, certainly since 2014 and following which there has been a huge spike in 2015, as the Banks have set aside considerable provisions to deal with the thousands of complaints that they are receiving each week in relation to these particular types of accounts.

About 11 million Packaged Bank Accounts are held throughout the UK through the major High Street Banks, which include, Lloyds, Barclays, HSBC, Halifax, Santander as well as some of the smaller Banks, such as Nationwide and The Cooperative.  These various account providers have been using their need to develop a system to charge for the provision of a current account and used the Packaged Bank Account facility as a mechanism to generate considerable profits on a monthly basis.  They are taking fees from clients of between £10 and £30 per month.  In order to justify this fee the Packaged Bank Account holders are provided with a variety of benefits (which has been found to be, at best, poor or, at worst, completely useless for them).  This is why the FCA conducted a study and has established that a considerable number of the Packaged Bank Account facilities were indeed mis-sold, and if a client places a complaint, this mis-sale can be addressed.

The product itself contains a variety of benefits, which range from mobile phone cover through to travel insurance and cheap excursions.  Unfortunately, when taking the account out, they should have been fully detailed and it should have been established whether there were any duplicates, or whether the policy itself was any good, whatsoever.  However, the main stumbling point that the Banks are finding themselves having to deal with in relation to these complaints is justifying why they sold this particular product, and why it was never discussed or disclosed in such a way that the client was aware that it may be more appropriate to take a fee free current account.

As a business we have been dealing with ever growing numbers of claims on behalf of clients.  We have considerable experience in dealing with complaints across the board that clients have in relation to banking disputes.  Therefore, taking on Packaged Bank Account charges is the next stage of our business.  PPI claims continue to grow, but will eventually cease in 2018.  We are seeing ever growing numbers of the Packaged Bank Account charge claims coming through.  In cases where we are representing clients in successful claims, they tend to receive refunds between the figures of £1,000 and £3,000.  This is because the refund encapsulates the fees that have been charged over the length of the account, in addition to interest, and compensatory interest calculated at 8%.

Therefore if you do have a Packaged Bank Account facility, and you feel that you were mis-sold it or that it is of no use to you, then it is important that we look at this to see whether any mis-sale has taken place and, if so, obtain a refund on your behalf – all on a No Win No Fee basis.

Claiming back Packaged Bank Account (PBA) fees is something that is beginning to take place over most of the Banks’ current account ranges.  The financial regulator, the Financial Conduct Authority (FCA) has conducted a study and found that there are serious flaws in the way that the Banks are promoting this type of product.

The Packaged Bank Account facility itself is a current account of which clients of Banks pay a regular monthly fee for.  The Banks have always wanted to charge clients fees for operating a current account, as they do not of course make any money from the free current accounts that they operate.  Therefore, the Packaged Bank Account facility offered them the perfect opportunity to generate considerable income and, as the Banks always do, they promoted it in a way that maximised their ability to sign up clients with minimum protection for the clients in question, as they did not establish that the account was fit for purpose.

Packaged Bank Account facilities tend to cost £10 to £30 per month.  In order to justify the facility itself, they offer a range of benefits for clients.  These benefits can include travel insurance, mobile phone cover, breakdown cover, as well as some other benefits such as discounted vouchers or annual subscriptions to organisations such as the National Trust.

There are approximately 11 million Packaged Bank Accounts throughout the United Kingdom.  A considerable number of these have been mis-sold.  In order for the correct sale to have taken place, the Bank must have established whether the product was appropriate for the client, and that the cost was justified.  Of course we do not mind that the Banks make a profit, however the concern is how the Banks make a profit.  If they do not protect the client through the way that they sell any products, in particular (in this case Packaged Bank Accounts) then they should be brought to task.

Sadly the Banks seem to do this on a regular basis, as can be seen through the various scandals, from the 1980s and 1990s involving Endowment Policies, through to Bank Charges and Payment Protection Insurance (PPI) in recent years.

The Banks themselves are making considerable provisions in order to deal with refunds in relation to Packaged Bank Accounts.  Whilst the level of refunds is not likely to be close to that of PPI, they will certainly be considerable, and in the coming few years are likely to reach well into the several billions of pounds region.

If you have a Packaged Bank Account and you are:-

• unhappy with it;
• are paying the fee;
• you are unaware of what benefits you do receive;
• or you do not use any of the benefits that they have attached to the product

Then you can of course look to make a claim.

We have worked on behalf of a growing number of clients with these types of accounts (whether open or closed) and it does not matter whether Bank the account has been open in the last few months or years.  The numbers of enquiries in relation to refunds concerning this particular mis-sale is likely to grow throughout 2016 as people become aware that, yet again, the Banks have mis-sold a product.

All of our work is carried out on a “No Win No Fee” basis and so if, for some reason, the claim is unsuccessful and it is established that the Bank followed the correct procedures, then there is no fee at all to pay.  So, as a consumer dealing with ourselves, there is no risk attached.

If you have paid any form of bank charges, including Packaged Bank Account (PBA) fees (which have been applied to your account on a monthly basis) then there is an opportunity for you to recover these.  There are two types of Charges that are being applied in this particular instance.  Both need to be looked at independently.

1.            Bank Account Charges 

In recent years, and following a report by the Financial Conduct Authority (FCA), the Packaged Bank Account charge sales market has been brought into question with regards to the techniques employed by the various Banks in the promotion of an account where a charge is applied for a variety of benefits which may, or may not be of benefit to the consumer.  The fees tend to range from between £10 and £30 per month and the type of cover that this pays for relates to travel insurance, roadside assistance, possibly a variety of cheaper options with regards to loans and credit cards as well as the operation of the account itself.

There are approximately 11 million Packaged Bank Accounts in the Country.  Following this report by the FCA a question mark has been placed over the sale processes of a large number of these.  Whilst the numbers involved will not reach the same levels as the PPI scandal, the Banks are preparing themselves (and have made significant provisions in their annual accounts) for several billions of pounds, in order to redress clients who made complaints with regard to the sales process employed, and the usability of the Packaged Bank Accounts.

2.            Over-Limit Fees

In 2009 a Ruling was passed following the involvement of the Office for Fair Trading, who lost a case when challenging the Banks with regard to the application of the various fees which have been applied to accounts following the consumer exceeding either a credit facility, or going overdrawn without prior arrangement.

The fees related to either just a normal excess which was charged at the time the excess was created, or on a daily basis until the balance was brought within the agreed terms of the operating account.  The fees could also include returned cheque items and other fees, but all were primarily to do with the breach of the consumer’s agreement with the Bank.

                Unfortunately (due to the Ruling in 2009) we are unable to make an application to recover these, despite the fact that the vast majority of the population believe that they are unfair and unjust.  However, should you have had a successful claim in relation to the Packaged Bank Account charges, there is an opportunity to look at recovering these fees.

We look at a number of claims in relation to the Packaged Bank Account fees and look at obtaining a recovery of the monthly payments that have been met.  The refunds take into account any Premiums that have been paid on a monthly basis.  In addition to this, any interest that has been applied as a result, as well as the compensatory interest which runs at 8% upon the full balance of the refund.  Should this refund be made, we can look at any other charges that have been applied to the account since the first Packaged Bank Account fee was taken.

This style of refund is looked at under the basis of “consequential loss” which basically means that, as a consequence of the Packaged Bank Account charge being applied, the facility was then breached and a further charge was applied for exceeding this.  If we can prove this, then there is a good opportunity to recover the excess fees.

We work on a purely “No Win No Fee” basis.  If we are unsuccessful in any attempt to recover these forms of fees on your behalf, whether it be the Packaged Bank Account fees themselves, or the excess following a successful Packaged Bank Account claim, then there is no charge to pay.

 

 

The problems with Packaged Bank Accounts (or PBA) relate to the sales process employed by the various current account providers throughout the UK.  This problem has been highlighted by the Financial Conduct Authority (FCA) in their report in 2013.  This brought to the attention the mis-selling of these particular accounts.  The Banks are of course not unfamiliar with mis-selling, and we have seen the PPI scandal rumbling on now for a number of years.  The Packaged Bank Accounts are now not necessarily going to take over at the same volumes or the amounts not as great, but it will certainly make a considerable dent in the Banks’ profits – as they have to address their dastardly ways in the way that they promoted and sold these particular accounts.

The Packaged Bank Account market stands at approximately 11 million accounts, and the report by the FCA has suggested that a large proportion of these were mis-sold.  Therefore, if you pay a monthly fee of between £10 and £30 on your current account, there is a strong possibility that this was not sold correctly at the outset.  The Banks should have followed a clear and specific sales process in relation to the accounts in order to protect the client from having to pay for a particular facility, which did not largely apply, or was inappropriate in some way.

The Packaged Bank Account facility has a range of cover which includes travel insurance and mobile phone protection.  However, whilst this could be of use to you, there are certain aspects of the account that had to be sold in a specific way in order to protect you, as the consumer.  This protection would then make sure that the account was appropriate, and that various other options (including a fee free based current account) which should not be provided as some “poor man’s current account” alternative, which would be no good – but promoted as a viable alternative which should have no stigma attached to it.

It is disappointing that yet again the Banks have chosen to take the route of deceit and fabrication in order to justify the sale of one of their products, rather than operating within the confines of their own regulator and internal regulation which was set up to ultimately protect the client.  Unfortunately, greed (as is the case when there is any mis-selling scandal) took the better of the Banks, and they found a fantastic way to generate considerable revenue from current account customers who have been operating free accounts in the past.  As you can imagine, the Banks are unhappy about having to address this situation with regard to refunds of the Packaged Bank Account fees, but we are seeing considerable numbers of refunds to date.  We are also seeing Banks themselves are providing sizeable figures in their accounts to compensate clients who are likely to make a complaint in the future.

Although the levels of claims will not be as high as the PPI refunds due to the fact that the product has not been around for as long, and a client is only likely to have one or possibly two current accounts (whereas with the PPI refund – this was based on a number of accounts), we are still seeing refunds in the range of £1,000 to £3,000, where they incorporate not only the account package fees, but also the interest and compensatory interest on any refunds.

We work on a “No Win No Fee” basis.  Should a successful claim be made, our fee is 24% including VAT on the sum recovered.  Of course, if there are no refunds, there is no fee to pay.

If you are considering recovering your Packaged Bank Account (PBA) charges, and the claim is upheld, you can look at recovering three, possibly four elements, as follows:-

1.            The first part of any refund will be the charges that have been applied on your account which are associated with the packaged account, namely the monthly fee of between £10 and £30.

However, the Bank may put a time limit on the level of charges that they do refund.  This is because they sometimes stipulate in their “conclusion letters” that you should have known that you could have complained earlier, or the complaint was out of time, and so therefore any refund should not apply to earlier accounts.  This part can of course be challenged, but it is an option open to the Lenders in order to dismiss or reduce claims considerably.

2.            After the account charges have been refunded, the Bank then needs to reflect the amount of interest that was charged upon the account and refund the amount of interest that would have accrued against the specific charge.

This is calculated at a rate which was associated with the account in question.  The refunds in regard to this are relatively small, but do still add up.  Again the amount of refund does reflect upon the level of charges, but it is normally about a quarter of the fees applied.

3.            The final element when refunds are considered is the 8% compensatory fee which is applied against not only the refunded account charges, but also the interest which has been calculated as a combined amount for the duration of the period involved.

This is not usually (due to the length and period that the account has been open) a vast sum of money but can add up with the other interest payments coming in.   It is usually approximately 15% of any charges that have been applied.  This is only a rough guestimate, and can vary depending upon the length of time that the account has been in place.

4.            There is a question mark over the fourth potential refund that you can obtain.  That is any other fees or financial loss that you have suffered as a result of the account package fees being levied.

This is a surprisingly underused part of any claim because it can be difficult to present and needs to be factually based.  We represent a large number of clients where we have obtained refunds for them in relation to Packaged Bank Account fees.  We look at then applying to the Bank for any associated fees that have been charged as a result of the initial fee being charged in the first place.  This does relate primarily to the account over-limit or excess fees, depending on how the Bank wishes to portray them, and it is in relation to those fees that we have applied to accounts, as a result of money being taken from it in relation to the fees from which a refund has already been obtained.

By way of an example, in April 2007 a packaged account fee was taken from your account of £20.  Two or three days later a direct debit was presented to the same account, but was either not paid or a fee was charged for going over a facility by under £20, and so another fee was applied.  This particular fee can be recovered.  Of course, this then mounts up and we can look at any other fees month-on-month after this, where instead of the following month being an excess of £20, it would be an excess of £40 as two fees will have effectively been taken from your account, and so forth.

As you can see it can become, not so much complicated – but confusing, and you may feel uncomfortable presenting this to the Bank.  This is why we represent large numbers of clients in relation to this particular issue.