Over the past 8 years, banks have had to contend with the financial burden of PPI claims. However, there’s a new troublemaker on the horizon – Added Value bank accounts. Mark Montgomery explores how the banks are reacting to this issue.
PPI has been hitting the headlines for all the wrong reasons over the last 8 years, and has been a source of financial burden for the banks – but is there about to be a new contender for the crown of the banks’ biggest headache?
Added Value bank accounts charge a monthly fee to give you benefits such as mobile phone insurance, travel insurance, card protection etc – and they have become quite lucrative to the banks – the market is worth £1.5bn, and one in five of us hold one at the moment.
An announcement that seven million people were mis-sold credit card and identity protection policies, which will result in £1.3 bn in compensation, has caused experts to turn their hands to predicting the next costly bank mis-selling mistake. Added Value bank accounts look a good bet, as Martin Lewis at MoneySavingExpert.com said they are usually “an expensive pile of pants”.
The biggest indicator that the banks could soon be taken to task is that the FCA has already tightened the rules on the selling of these accounts over speculation that mis-selling was occurring. Combine this with the fact that it is very difficult to successfully claim on the insurance provided, and that some of the banks have partially or fully withdrawn from this market, suggests they are preparing for the worst.
In terms of complaints so far – the FOS said it received 1,629 complaints about Added Value bank accounts during the 12 months up to 31st March 2014 – a substantial increase in the number of cases compared to previous years.
All of this suggests that complaints about Added Value bank accounts are going to rise. Banks have already started preparing for the worst, and it’s likely they will be bringing in extra resources to resolve the issue.
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