Can you reclaim on your packaged account?

If you pay a monthly fee for your current account, commonly known as ‘packaged accounts’, you may be due a windfall of hundreds or even thousands of pounds.  

Although these accounts can be very good value for the right customer, if you can prove that your account did not suit your needs and that you were missold it, the bank may have to give you money back. 

Banks must abide by strict rules if they sell these accounts to customers, including sending out annual mailings reminding customers to check if the product is still right for them. 

Nationwide, which sells the popular FlexPlus account costing £13 a month, recently wrote to some customers who had not received this mailing, reminding them to check the account still suited them. 

“Unfortunately, an error meant some customers hadn’t received their annual eligibility mailing, which prompts customers to ensure the product still meets their needs. The issue has been corrected and all customers are now receiving the mailing. However, we are writing to all impacted customers to make them aware,” a spokesman said. 

The issue is a timely reminder to everyone holding these accounts that they should check that they can still use the benefits and cancel if not. If you have had one of these accounts for some time, you should also check whether it has been suitable for your needs over the period that you have held it, as you may be entitled to your money back. 

What is a packaged account and why might I have one? 

Packaged accounts are so called because your ordinary current account comes as part of a ‘package’ with other perks such as travel insurance, breakdown cover and mobile phone protection in return for a monthly fee. Each high street bank that offers them gives you access to a different suite of products and the monthly fees vary too. 

For example, the Nationwide FlexPlus account offers worldwide family travel insurance, UK and European AA breakdown cover and mobile phone insurance for £13 a month, while the Cooperative Bank’s EveryDay Extra current account charges you £15 for a similar suite of benefits, but with the breakdown cover from the RAC. Virgin Money’s ‘Club M’ costs £12.50 a month for mobile phone and gadget cover, worldwide travel insurance and breakdown cover in the UK only. 

For some people, these accounts may be worthwhile if they use all the perks. Often the mobile-phone cover will apply to every member of the family – useful if you have teenagers- while those who take frequent worldwide holidays may find the travel insurance alone ensures that the account pays for itself. If you have a joint account, the perks usually cover both of you for the same fee, making it more cost-effective. 

However, if you do not travel regularly, don’t’ drive, or the insurance isn’t suitable for your circumstances, the economic benefits are less likely to stack up. 

You can check whether a packaged account is worth it for you by multiplying the monthly cost by 12 and then checking it against the cost of buying each of the separate benefits you otherwise use – so if you only use the travel insurance and it would cost you £80 for a worldwide policy then the account is not worthwhile. 

When might I be able to reclaim? 

You cannot usually reclaim the money you’ve spent on a packaged account just because you’ve never had cause to claim on the insurance, only if the insurance was not right for your circumstances.  

However, if the insurance sold with the account was not suitable for your needs and you weren’t made aware of this, you may have a case. This is especially likely to be the case if the bank did not check your eligibility every year.  

Examples of this include if you became too old to use the insurance, as many of the policies have upper age limits on when you can make a claim, but also if the bank did not check whether you had developed a medical condition that invalidated your cover. 

Other reasons why you might be able to reclaim include if you were told that you could only receive a benefit such as an overdraft if you had a paid-for account and this was not the case, as well as if you did not know you had to register a phone or car in advance  to claim on the packaged account insurance and then had a claim turned down because of this. 

High-pressure sales tactics, which have been banned since 2013, are also a reason to allow you to reclaim, also if you were signed up to a paid-for account without your knowledge, or the price was hiked without notice. 

If you have had the packaged account for many years, you may wonder if you’re too late to claim. The rules state that you have six years to make a complaint and receive money back. However, if you were sold the product more than six years ago but only just became aware there was a problem – for example you checked the small print and found you weren’t covered by the insurance – you can still reclaim for six years from the moment of realisation. 

How do I do it, and what might I get? 

Think you might have a case? Your first step is to write to the bank itself, giving them the reason why you think you were missold and asking for compensation. You’ll need your bank account number, the date you took out the product if you know it and some bank statements or other documents showing the fees you paid. 

You’ll also need to explain why you think you were missold. 

Your bank may offer you compensation immediately. If it doesn’t, and you still believe you are entitled to compensation, you can refer your case to the Financial Ombudsman. This independent body is free for consumers to use, and will make a final, binding decision after considering the evidence on both sides. 

If either the bank offers you compensation or the Ombudsman finds in your favour you should receive all the fees you paid back, as well as eight per cent annual interest. Exceptions include if only one of you was eligible to use insurance such as travel insurance and you held a joint account, in which case you will get half of the fees back. 

Whether or not your packaged bank account was missold, you should check every year whether the benefits it offers are still applicable to you or whether you can get better value elsewhere.