FOS: sharp rise in packaged accounts complaints but only 14% of cases upheld

Complaints to the ombudsman about packaged accounts have jumped, but do these products deserve the bad press?

The number of complaints about packaged current accounts has more than doubled according to new figures from the Financial Ombudsman Service (FOS).

New complaints about packaged complaints jumped from 21,348 between April 2014 and March 2015 to 44,244 between April 2015 and March 2016 - an increase of 107%.

However, despite the rising number of gripes about packaged accounts the proportion being upheld has fallen sharply.

So are packaged accounts really as bad as the FOS complaints figures paint them out to be?

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The problem with packaged accounts

Packaged current accounts allow you to get extra benefits like travel insurance, breakdown cover and gadget insurance, in exchange for a fee typically ranging between £10 and £25.

Providers have come under fire for mis-selling these products in the past, with some criticised for using high-pressure sales techniques to get people to sign up and selling the products to people that couldn’t ever actually use the benefits.

These issues led to new rules being introduced to get the industry in order in 2013. Read more about this in: Rules tightened on packaged current accounts.

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Why the figures are misleading

The headline figure showing a sharp rise in the number of people complaining to the FOS about packaged accounts suggests that these products and the way they are being sold are still not up to scratch.

However, when you look into the number of complaints upheld the proportion has more than halved.

Between April 2014 and March 2015 of the 21,348 complaints received 33% were upheld.

But between April 2015 and March 2016 of the 44,244 complaints the FOS received adjudicators ruled in favour of the claimant in only 14% of cases.

So even though the numbers of complaints have gone up, this doesn’t necessarily mean packaged accounts have got worse or are necessarily a bad product.

A spokesperson for the FOS told loveMONEY: Though undoubtedly some people were signed up who didn’t want, couldn’t use or didn’t need the accounts, for many people, the benefits packaged with the accounts were widely used.

So why have complaints jumped?

The FOS says the rise in complaints had two main drivers in 2015/16; claims management companies and publicity about the products in the media.

The FOS told loveMONEY that six in 10 packaged accounts complaints were brought forward by claims management companies in 2015/16.

Often these companies will fire out emails or make calls encouraging anyone who has or has ever had a packaged account to make a claim, when they don’t necessarily have one.An example email is shown below:

The FOS also points out complaints may be rising because of the coverage of packaged accounts in the media.

In its annual report it states: “The increase in the number of people who’ve contacted us about packaged bank accounts this year is probably a result of the media attention these accounts have received.”

Successful and unsuccessful claims

The problem is just because you have a packaged account, doesn’t necessarily mean you have been mis-sold it.

The FOS says packaged bank account complaints generally fall in to three main categories:

• People who never wanted the accounts but found they’d been signed up without permission
• People who had agreed to the accounts but told the bank to cancel them, only to find out they hadn’t
• People who have packaged bank accounts but subsequently found out they couldn’t use the benefits (prevented by age limits from using the travel insurance, for example)

So if someone hasn’t used all the features of an account, for example, that doesn’t mean the bank was wrong to sell it to them.

The FOS says that the majority of the complaints it sees are about sales and should be resolved without the need for an ombudsman to get involved. But with the sharp rise in the number of complaints the FOS has developed its online support for packaged accounts to help people figure out whether they have a cliam.

You can also check out common complaints and case studies page to see the sorts of cases where you are likely to be successful. We’ve picked out two examples.

A successful claim:

Mr G complained that his bank didn’t offer him a free account – only a packaged bank account. He'd just moved to the UK from a country where all bank accounts have a fee.

We couldn’t find any evidence that the bank had told Mr G that free accounts were available. So we decided that they hadn’t given Mr G a fair choice about having the account.

An unsuccessful claim:

Mr B complained that he’d been pressured into taking out a packaged account during a phone call with the bank.

When we listened to a recording of the phone call, we heard the bank tell Mr B about the features of the account and its benefits. The bank then left Mr B to make up his own mind about the account.

Given this, we didn’t agree that Mr B had been pressured into taking the account.

How to complain

If you think you’ve been mis-sold a packaged current account, you should first contact your provider to complain. It's a good idea to do this in writing, so you have a record.

They have up to eight weeks to respond. If you’re unhappy with the answer or they don’t respond in this time you can take your complaint to the FOS.

This is free to do, so there’s no need to use a claims management company, which will charge you a fee for taking on your case.

You just need to fill in a complaint form that you can get from the FOS website detailing your grievance and attach any supporting documents that can help your case.

If the Ombudsman finds in your favour it can order the bank to refund fees you have paid for the account plus interest. It may also tell them to pay compensation for the trouble and upset caused.

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