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Millions pay a monthly fee for their bank account, often sold on the basis of ‘free insurance’. While it can be a great deal, even the regulator, the FCA, says huge numbers of these policies are “useless”. We believe thousands may have been mis-sold them.
If you’ve got, or had, a premium account or packaged bank account in the last 10 years, if they overpromised, told you it was compulsory, or gave you insurance that didn’t cover you, you could be due £100s or even £1,000s back. This is a full step-by-step guide, including template letters, to reclaiming bank account fees.
For some people, packaged accounts can add up big time.
To check for yourself, read our Best Premier Current Accounts guide
In this guide
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Before you begin, a little inspiration...
This is a new campaign, but even so, we have some successes to inspire already. In the last year alone, the Financial Ombudsman Service has had a ten-fold increase in complaints.
"Wrote to my bank 4 weeks ago as a result of reading your item on mis-sold packaged bank accounts - exactly 4 weeks later and Co-op Bank have just credited my account with £863, the whole amount I had paid since opening the account in 2003. Well done Co-op Bank, well done Martin`s Money Tips!" Borderlander
"Been there and got the t-shirt... reclaimed a few hundred £££ of LTSB Platinum account fees last year" Phoebe1989seb
"Last year l took over as power of attorney for my 87-year-old uncle and found he had been ‘upgraded’ to a gold account for the last four years. They knew he had no possessions and lived with his sister. We complained and got one year's worth of payments back, £155.40... We're happy with what we got, I know it should have been more and I hope if it happens to others, they'll go for the full amount." Wendy, via Facebook
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Step 1. Packaged account reclaiming need-to-knows
This is the first incarnation of this guide. Please tell us if it works for you - we really want to hear about successes using the reclaiming process. Use the Packaged Accounts Reclaiming discussion
This is about premium accounts you pay a monthly fee for
These current accounts usually come with a monthly fee, possibly as much as £25, and for that you get 'free' insurance policies bundled in - most commonly travel, mobile and vehicle breakdown insurance.
Sometimes, extra perks are thrown in. While these can sometimes be useful - such as access to cheap mortgage rates or free National Trust membership - they are often pointless gimmicks, such as 10% off that bank's mega-expensive home insurance. To compare and see if any of them are good for you, use our Packaged Bank Account Analyser tool.
Bank staff incentives led to widespread mis-selling
Staff were incentivised to push packaged accounts without taking into account who they were selling them to. This led to the introduction of new rules by the FCA and an announcement in 2012 that packaged account mis-selling victims can claim compensation. Primarily, from 31 March 2013, providers must inform customers whether or not they're eligible under each policy and issue annual eligibility statements to all packaged account holders.
There are a number of specific reasons why you may have been mis-sold, but they all revolve around the same idea: you weren't told what you were being sold, or were told the insurance policies would cover you when they actually didn't. There's a full set of reasons in Step 2.
The right premium accounts can be seriously good value
Some are a cracking deal for many and actually save them money.
This isn't like Reclaiming Payment Protection Insurance, which was sold underhandedly to almost everyone who took it out. Packaged accounts can be a very good option - the problem is with the ones sold wrongly by bank staff who were paid incentives to sell them.
Make sure you consider the alternatives like free Bank Accounts first, and be sure you'll actually use any perks a packaged account gives you. For full breakdown of pros and cons, see the Best Premier Bank Accounts guide.
Check your statements to see if you've been paying
Usually it'll show up as a transaction on your statement, under the name of the account you're signed up to. Check current and old statements, or call up your bank (you can ask for copies of old statements).
If you find these transactions and don’t remember signing up, that itself could be a sign you've got a complaint. If you discover a payment, collect as many statements as you can that contain them. You'll need the evidence.
If you're successful, you could be owed £100s
If you're successful, the figure could be in the hundreds. But it'll depend on how much you were paying each month, and how long for. A successful reclaim would see you get back the monthly fees you've been paying since the account was opened.
As an estimate, multiply the payment amount by the number of months, starting from when you first took it out, or when you can find it on a statement. If you've been paying £15/month since January 2009, you could be owed at least £540.
NEVER pay to reclaim - you can do it easily, for free
This is a very new area of reclaiming so as yet, there aren't hundreds of claims management companies (CMCs) coming forward. If this campaign grows, it's likely we'll see more coming out of the woodwork, although our answer will remain a very firm NO.
CMCs will charge a fee of 25-30% + VAT of the money you reclaim if you're successful. Even if more start offering, you can always go through the process yourself just by sending a few letters, avoiding paying a not-insignificant chunk of money. Follow our step-by-step help and do it yourself, for free.
Not everyone who has one needs to cancel
Only if you don't need the bundled policies, or would be happy to buy the ones you need separately. Packaged accounts can be good value, depending on your circumstances.
For a family that has multiple iPhones, a car, and travel abroad regularly, these accounts can be stonking deals. Try our Packaged Bank Account analyser tool to see how it looks for you.
Of course, done right, these accounts can be serious MoneySavers (see Best Premier Bank Accounts). Yet the millions who get no gain should cancel, and the thousands who may have been mis-sold can get money back.
Step 2. Was my premium account mis-sold?
Bank staff have a responsibility to ensure customers understand the product they're signing up for. It's this that has often failed to happen. The key is what you were told (or often NOT told) at the point of sale or upgrade.
Banks have a responsibility to ensure the insurance was right for you at the point they sold it.
The most common examples of mis-selling we've found are when the extra insurance you get doesn't actually cover you - for example, the travel insurance has an age limit and you're older - or if a fee was added without you even realising.
Below are some scenarios where mis-selling may have occurred. It’s by no means exhaustive, and it's not a guarantee that you’ll be successful.
If you feel you've been mis-sold or treated unfairly, for the sake of a couple of stamps, it’s worth seeing if you have a valid complaint. But if you're happy with your account and it works for you, keep it.
The top mis-selling examples...
These are the common, typical reasons many may have been mis-sold.
- You wanted a loan, mortgage or overdraft and were told you HAD TO get a packaged account to do so.
- You're over 65, and wanted one for the travel insurance – but when you went to claim on it, found out it DID NOT COVER over-65s. It only covered younger people, and no one had told you.
- You were told you'd get unbeatable discounts on things like home insurance, but found applying as a new, not existing, customer was cheaper.
- You weren't told you had to register for your iPhone to be covered and only found out it wasn't covered when making a claim.
- You were sold a fee-paying account, or upgraded to one, without your knowledge.
- Pushy sales staff made you feel you had no other option but to get a fee-paying account.
Most mis-selling falls into one of these categories
But most complaints fall under the more general scenarios below - if you think you've been mis-sold and you're not covered in the most common examples above, you could fall under one of these:
You didn't know you had a packaged account
We've heard from plenty of MoneySavers who didn't realise they had a paid-for account until scouring their statement for the monthly charge - possibly the result of bank errors or over-zealous salespeople.
This can happen with upgrades as well - no-one asked, but suddenly fees begin appearing. Check old paperwork to see if there are any documents you may have forgotten about.
Dig out old statements to check you're not paying out £10-£25/month for an account you don't recall signing up for. If you are, go to Step 3 .
You aren't actually eligible to claim on the insurance policies
One of the big problems with these accounts is when people sign up thinking the insurance policies will protect them in specific situations, but when they need the cover, they find out they're ineligible to claim.
The rules on reclaiming aren't clear-cut. But if you fall into either of the following camps, it's worth pursuing (see Step 3).
- It said, "You're insured by travel/breakdown/mobile cover", but you weren't. This is a pretty clear case of awful information being given, especially if the policy you're ineligble for is one of the reasons you opened the account.
- It didn't say, "You're NOT covered by travel/breakdown/mobile", and you only found out when trying to claim. A big example is if travel insurance only covers under-65s, and the bank knew you were 66 when opening the account. Whether you've a complaint here is a bit murkier, and will come down to the bank or ombudsman's discretion when you complain.
The sales people pressured you into it
The FCA itself has said packaged accounts are "generally sold rather than bought". This really tells the tale - we've heard from bank staff under incredible pressure to sell these accounts, which doesn't tie in well with providing for the needs of the customer, and leading to possible mis-selling.
The FCA's new rules aim to get rid of this bias (they came into force in March 2013), but if this was your experience when opening an account, or being upgraded, you could have a case - go to Step 3 .
You tried to cancel but were forced to keep it
If you were told you had to keep the account when you asked to cancel it, it's likely you've got a case for a reclaim.
But there is a fine line between being forced to keep paying up and sales staff strongly encouraging you to keep it as it could be useful. It's far less likely that the latter could be interpreted as mis-selling.
You were told you had to upgrade
One of the most common reasons we've heard is people being told "you have to upgrade to a packaged account in order to take out a loan". Sometimes this is simply untrue, and sometimes sales staff forget to mention other loans/mortgages are available at slightly higher rates without signing up to pay a monthly fee.
If you felt you had no choice but to take out the packaged account, you could have a decent chance of winning a complaint.
You weren't told there was a free alternative or other options
Did you know there was a free alternative? Was this made clear to you at the time you signed up? This isn't unheard of. It's especially affected people who are new to the UK and perhaps used to paying for banking in their home countries.
If you've never made use of the bundled insurance policies and feel you weren't given the info to make an informed choice, then go to Step 3 .
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Step 3. Complain to your bank
If you feel you have been mis-sold your account, you must first complain directly to the bank. The most important thing to understand is that with financial firms you have a RIGHT to be “treated fairly”. Think carefully about why you’ve not been treated that way.
When contacting the bank, explain why they didn’t treat you fairly, primarily due to the information they gave you when they signed you up for the account. If it will help your case, gather together copies of all the documents you have, including past statements.
Help making an official complaint
Speak to your bank or check its website for the address of the complaints department. Generally these things are best done in writing, but if that's too difficult, don’t worry about calling. Just ask they note it down as a formal complaint, and also ask for written confirmation of that.
Don’t feel you have to be formal. Just explain the point clearly, concisely and honestly as if you were explaining to a friend why you’ve been wronged. To help, we've put together a template letter to start you off - download it and fill in the blanks (use it to help start you off, but the more you write it in your own words, the better):
Template: Packaged accounts reclaim letter
IMPORTANT. KEEP A COPY, IT’LL BE HELPFUL FOR GOING TO THE OMBUDSMAN
But there's something crucial you need to understand. At this stage, reclaiming's like a game of 'who blinks first?'. This is important, so we're shouting it...
You bank will probably say "no". Don't worry!
Your real aim by complaining to it is to get to the Ombudsman
We don’t yet know banks' attitude to these complaints. But at the start of similar past reclaiming campaigns like PPI, banks rejected many cases the Ombudsman later upheld.
They do this deliberately as they know most people won’t take it further. Often the rejection sounds legally definite. Yet don’t let that put you off. If you feel you were treated unfairly, if they reject you then it just enables you to contact the independent Financial Ombudsman.
They then have eight weeks to respond. If they fail to do this, or you're not happy with how they've dealt with your complaint, don't give up – go to the next step.
FAQs on complaints
Is there a deadline for reclaiming?
No, you can complain about a product sold at any time, though here are some guidelines which may help. It's easier if your account was active in the last six years, but don't let this put you off.
- Accounts started in the last six years: There's no issue here at all. Even if the account's now closed, you can start a reclaim.
- Older accounts that are still active, or ended within the last six years: You can start a reclaim. The six-year rule applies to active accounts, so an account taken out eight years ago but closed four years ago was still active within the key six-year period.
- If your policy ended over six years ago: The statue of limitations means banks don’t need to keep records that are over six years old. However, there is no official cut-off time, so if you’ve still got the paperwork, while your chances of success are lower with older accounts, it's not impossible.
There's no difference if you signed up online or in a branch
The same questions would still be asked. Investigations would look at what information was available at the time of opening the account, whether verbal, in print or both.
Factors like the fee being clearly identified, and what was included with the account are all significant. With online applications, it'll be a case of assessing the clarity of the information displayed.
I've claimed on one of the insurance policies. Can I complain?
Possibly. The key to reclaiming is whether staff sold you an account that didn't cover you for the main thing you wanted it to.
So if you took out an account because you wanted the travel insurance, but at the point you needed to claim you discovered you were ineligible, then it doesn't matter that you were eligible for the included breakdown and mobile insurance - the travel insurance would be key.
As this is a very new area of reclaiming, there aren't many examples. According to the Ombudsman, each case will be looked at individually and the whole picture considered.
I was eligible for insurance, but didn't use it. Was I mis-sold?
The key here is whether you could have used the policy. If you were eligible but simply never had a need to use it, that's not mis-selling - unless you never realised you actually had the account.
However, there are plenty of reasons that policies can be unsuitable - read through Step 2 to decide whether you have a case.
The account holder's deceased or needs help, can I do this?
If the account holder has passed away, any monies owed become part of their estate, so the person who inherits is entitled to reclaim (let the executor know too). If there's no will, this follows the rules of intestacy (see the HMRC website). Yet it's worth noting there may be problems proving what happened at the time of the sale if only the policyholder was present.
If someone you know requires help with their finances, and they're capable to instruct you to act on your behalf, it's worth trying.
If the person has a mental health condition, or other issues that mean a packaged account was obviously unsuitable, they are more than likely to have a case.
If I reclaim the money, can I then keep my account?
It's hard to see why you'd want to, but technically there wouldn't be anything to stop you from doing so. It's worth checking out the best fee-free bank accounts or see if there's a better packaged account option.
Can they punish me for complaining?
No, you have a right to complain and take it to the Ombudsman. They can’t put the fact you’ve complained on your credit file.
Past Ombudsman rulings show they can’t hold it against how they treat you – though of course, if they agree you were mis-sold, they can move you off that account.
The one negative, though, is the bank will know this information when you apply for another product from it (not any other bank), and it could decide to incorporate that, but past experience shows this is unlikely.
Step 4. Escalate to the free Financial Ombudsman
In the likely instance your complaints been rejected by your bank, don't assume that's the end of the matter. You have a right to take any complaint it has turned down to the independent Financial Ombudsman Service.
This is the official body for settling disputes between individuals and financial companies. It's a free service that acts as an impartial adjudicator. Present it with the facts,. and it'll decide whether your account and the circumstances under which it was sold, were unfair, then decide what redress is required. In most successful mis-selling cases, this means a refund.
BUT it's important to note they won't look at your complaint until you've contacted your bank and given it eight weeks to respond. Once you have a response, or haven't been given one within eight weeks, only then will it be able to investigate your complaint.
The Ombudsman process is a simple one, but it's by no means quick - complaints can take over a year to be settled, depending on how complicated they are. Make sure you're not counting on the cash now.
How to make a complaint
To get the ball rolling, you'll need to fill in their complaints form below, which must be hand-signed and posted to them. Also enclose any paperwork to back up your case.
But, for general guidance, as with the first letter to the bank which you could always copy and paste into here, don’t feel you have to be formal. Explain the point clearly, concisely and honestly, all in your own words, just as if you were explaining the situation to a friend.
Template: Complaint form
It's quite simple to fill in, though do take care. If you need help filling this out, you can call them on 0300 123 9123 or 0800 023 4567, and they'll guide you through it, or use our step by step guide below. It's written in Microsoft Word so you can easily cut and paste sections or print it and have it next to you as you're filling in the Ombudsman's form:
Guide: Ombudsman complaint form help
The Ombudsman will then send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.
Sometimes this will take a long time, possibly around a year but maybe even longer as the Ombudsman deals with huge numbers of complaints, especially with the current avalance of PPI mis-selling complaints. But don't worry - you can leave the matter to the Ombudsman to resolve and it will contact you with any offers from your lender.
I think the Ombudsman unfairly turned me down
The Ombudsman's decision is usually made by an assigned adjudicator, but if you disagree with the result, you can ask for a formal decision to be made by one of the official ombudsmen at the service. This usually takes several months as it involves a detailed investigation into your case, but don't be afraid to push your complaint further if you think the initial decision isn't right.
After that, while the finance company must accept the Ombudsman's decision, you still have the right to take the company to court if you don't agree with the result.
It's also worth noting that if you feel the Ombudsman hasn't handled your case correctly, eg, there have been unnecessary delays, you can ask for a senior manager to review it. If that doesn't resolve things, you've a right to go to the Independent Assessor (though this is only about quality of service, not the actual decision made).
For other complaints the Ombudsman can help with, see the Your Financial Rights guide.
Please tell us your experiences!
Unlike PPI, this is a very new area of reclaiming with more developments coming out regularly. Please let us know how you get on so that we can keep our guide up-to-date and help as many people as possible. Report your packaged account reclaiming successes and failures in our forum - all stories are useful for other MoneySavers.
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