New rules on packaged bank accounts have improved standards, but firms have more work to do on sales and complaints handling

In 2013, the FCA introduced new rules on packaged bank accounts. These were designed to help customers understand whether the product was right for them. Firms are now required to establish and record whether customers are eligible to claim for each of the insurances in the package. They are also now required to send annual statements, prompting customers to review their eligibility and whether the products continue to meet their needs.

The findings of the thematic review suggest that the new rules around packaged bank accounts have raised standards in the market, but that firms have more work to do on sales and complaints handling.

The review found that eligibility checks for travel insurance had improved, but firms had more work to do to check and record eligibility for other insurances, such as gadget insurance and motor breakdown cover.

The review also assessed how firms were dealing with complaints initiated in late 2014 about packaged accounts, when complaints volumes were rising. The review suggested that too many customers who complained about being mis-sold packaged bank accounts during this period did not get the right outcome; a finding supported by the number of complaints the Financial Ombudsman Service (the Ombudsman) upheld in that period.

Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations, said:

“We continue to believe that there is a place in the market for packaged bank accounts, as they can provide good value and convenience for consumers.

“But we expect these products to be sold fairly and for customers to have the information they need to make an informed choice. And customers should not have to complain to the Ombudsman to get a fair outcome if things go wrong.”

The FCA has written to all firms involved in the review to provide individual feedback. Firms not involved in the review should consider whether any of the issues identified apply to their own businesses, and take action where necessary. The FCA is also undertaking a further review of more recent complaints on packaged bank accounts to understand the extent to which firms have now raised standards.

Notes to editors

1. Thematic review: TR16/8: Packaged bank accounts[1]
2. Insurance Conduct of Business rules specific to packaged bank accounts were introduced in 2013.
3. The FCA carried out thematic work on packaged bank accounts that covered a range of firms and involved, mystery shopping, desk-based reviews of data, policies and procedures and firm visits and complaint file reviews.
4. The assessment covered the period from October 2014 to April 2016.
5. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
6. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
7. Find out more information about the FCA[2].