Reclaim packaged bank account fees
Mis-sold? You could get back £100s or even £1,000s
If you’re paying a monthly fee for your bank account, you might be entitled to reclaim £100s or even £1,000s, as numerous accounts were systematically mis-sold. This guide will walk you through the process of reclaiming packaged account fees, providing you with a free online tool or free template letters to assist you.
1-min read to start your packaged bank account reclaim
Here’s an overview and direct links to our reclaim tool and template letter if you’re already familiar with the process. Otherwise, continue reading for a detailed guide.
- What is a packaged bank account and why could you be owed money? If you currently have or previously had a packaged bank account – which charges a monthly fee for benefits like travel, mobile, or breakdown insurance – you might be entitled to a refund. These accounts often appeal to those seeking affordable insurance, but they have also been widely mis-sold. Compensation amounts can range from £100s to £1,000s.
- What constitutes mis-selling? Regulations require banks to ensure that any additional benefits, such as insurance, are appropriate for the customer. Other examples of mis-selling include being informed that a packaged bank account was necessary for obtaining an overdraft or mortgage, or being “upgraded” without your agreement. Refer to the full mis-selling checklist for more details.
- Avoid paying claims firms – utilize our FREE TOOL. Claims firms can deduct 25% plus VAT from your payout, so instead, use this quick link to access our reclaim tool (developed with the complaints site Resolver) available in our guide.
Step 1. What is a packaged bank account?
Packaged accounts involve paying a monthly fee for your bank account in exchange for various benefits, typically bundled insurance policies such as travel insurance, mobile phone insurance, and car breakdown coverage. If you’ve selected one after careful consideration, it can be a cost-effective way to obtain multiple types of insurance.
However, if a pushy sales agent pressured you into getting one, if you were told that a mortgage was contingent on having such an account, or if you were “upgraded” without your permission, you might be entitled to substantial compensation. It has been discovered that banks have frequently mis-sold these accounts systematically.
Cancel your account now if the insurance is useless
If you don’t need the insurance, then packaged accounts aren’t suitable for you. It’s that simple.
If you do need the insurance, the key is to determine if it’s cheaper to purchase the insurance separately, so do the calculations. Instead of thinking £15 per month, consider £180 annually – always multiply the monthly cost by 12 to get the yearly cost to compare insurance expenses and assess if it’s worthwhile.
Compare the rate your bank provides with the cost of buying independently. Refer to our Travel, Mobile, and Breakdown cover guides for alternatives.
If you have a useless packaged account, cancel it to prevent further charges and request a switch to a fee-free account. Don’t worry if you were mis-sold the account, as you can still reclaim if you take this step.
I’m not sure if I have one – how can I check?
If you’re uncertain, the account fee will appear as a transaction on your statement, listed under the account name you registered for. Review both recent and past statements, or contact your bank (you can request copies of previous statements).
If you identify these transactions but don’t recall signing up, it might indicate a potential issue. Upon discovering a payment, gather as many statements as possible that include these transactions. You’ll need this documentation as evidence.
Step 2. The mis-selling checklist
Mis-selling can occur through various methods—sometimes it’s evident, while other times you might be unaware that you were mis-sold. Additionally, mis-selling isn’t confined to the moment of sale; it can happen afterward as well. For instance, you might not have been informed that you needed to register your phone or car for the insurance to be valid.
Here are the main categories of mis-selling. If you identify with one or more of these, you likely have a case (if any apply, refer to the how to reclaim section):
1. You were wrongly told you had to get it – for example, to get a mortgage
Customers were frequently informed that enrolling in a packaged account was a prerequisite for obtaining a loan, mortgage, or other financial products. They were often warned that their application for other services would be rejected if they did not sign up for a packaged account. This practice is a clear example of mis-selling.
In some cases, it was an outright falsehood that the account was necessary. However, the situation is sometimes more ambiguous. If holding a packaged bank account genuinely provided a benefit, such as a lower interest rate on a mortgage or loan, it is possible that mis-selling did not occur. This is true unless there was a free or more affordable alternative available that offered the same advantage.
2. You were ineligible for the insurance – for example, you were too old to qualify, or had a medical condition
A significant issue with these accounts was that individuals signed up under the impression they were protected by insurance, only to find out they were ineligible when they filed a claim. If the bank failed to verify your eligibility for the insurance annually, you might still have had a claim.
A typical scenario involved people who were too old to qualify for travel insurance, as these policies frequently have upper age limits. Additionally, if you weren’t asked about any conditions that could prevent you from claiming, like a medical condition that could invalidate travel coverage, this could also lead to problems.
Important: If one person was ineligible for insurance on a joint account and one eligible, you can claim for HALF the total fees and interest back.
3. You were misled into taking out the account
The regulator has said packaged accounts were “generally sold rather than bought”. We’ve heard from bank staff under incredible pressure to sell these accounts. Examples include:
- You were told it was a privilege to get the account, but the product wasn’t fully explained to you.
- A pushy salesperson wouldn’t take no for an answer.
- You were told you’d be eligible to claim when you weren’t.
- You were wrongly told you’d get big discounts on other insurance if you took a packaged account.
- You weren’t told the full cost.
Note: Rules came into force in March 2013 to stop these high-pressure tactics, but that doesn’t stop you reclaiming if you bought under duress.
4. The fee was added without your knowledge
Many people have discovered they had a paid account only after closely examining their statements. This situation might arise due to a banking mistake, an overly eager salesperson, or being enrolled without consent through deceptive means.
Such instances can occur when opening a new bank account or when existing customers are ‘upgraded’ without their knowledge. It’s advisable to review old statements to ensure you’re not unknowingly paying £10 to £25 monthly for an account you never agreed to.
5. You tried to cancel but were forced to keep it
If you were informed that you had to maintain the account when you requested to close it, you probably have grounds for a reclaim.
However, there’s a subtle distinction between being compelled to continue paying and sales staff vigorously persuading you to retain the account. The latter is less likely to be seen as mis-selling, unless aggressive sales tactics were employed.
6. You were told it was the only way to get an overdraft
Numerous individuals have shared that when they approached their bank to request an overdraft, they were informed that their only option was to sign up for a packaged bank account.
This can be a tricky situation, as packaged accounts often offer larger overdraft limits compared to standard, fee-free accounts. However, if there were other accounts that provided the overdraft amount you needed, you might have been misled into purchasing the packaged account.
7. No one mentioned you needed to register your phone/car
Imagine your iPhone is stolen, and you think to yourself, “No worries, my insurance plan will take care of it.” However, when you attempt to file a claim, you find out that you’re not covered because the phone wasn’t registered—something nobody told you was required.
8. You were told having one would improve your credit score
Effective financial management can improve your credit score, rather than relying on a specific packaged account. If you were advised otherwise and ended up choosing such an account, proceed to step three for guidance on what to do next. To explore strategies for enhancing your credit score, check out our Credit Rating guide for advice on becoming more financially appealing.
9. Your bank hiked the price and didn’t tell you
While this is not technically mis-selling, it’s still a valid reason to claim for compensation, as quite simply, you need to be told of a price rise. Yet many banks upped their prices without notice.
Important: There is no time limit on how far back you can claim, but in England and Wales the statute of limitation is six years, while in Scotland it is five years. The further back you go, the harder it is to complain, but it is possible. So even if something was sold more than 20 years ago, if the firm was regulated at the time and you didn’t become aware of a problem until recently, you can make (and win) a complaint.
I think I was mis-sold. How much can I get?
If you were sold a product or service under false pretenses, you are entitled to a full refund of all the fees you paid, along with interest. However, be ready for a challenging process. We’ve observed that some banks may alter the insurance to make customers eligible as a way to address complaints. Nonetheless, this doesn’t negate the fact that you previously paid for ineffective coverage, so insist firmly on receiving a complete refund of all your fees.
- If you were mis-sold you should get the fees you paid back, as a base. Quite simply, if you paid £15/month for two years you should get £360 back (£15 x 24 months).
- You should also get 8% annual interest on any claim, as it’s assumed you’d have earned money on that amount had it not been taken from you. The interest is calculated at a consistent rate of 8% annually, but it’s not compounded, meaning you won’t earn interest on the accumulated interest. For example, if you claim £100 for two years of fees, with flat interest, you’d receive £8 each year. In contrast, with compounded interest, the first year’s reclaim would yield £8, and the second year’s reclaim would amount to £8.64.
Step 3. Complain to your bank
If you’ve read the above and think you’ve been mis-sold a packaged bank account you can make a claim using our new free online reclaim tool. Alternatively, you can use our free template letter.
How our tool works
Our complimentary online service assists in composing a letter (which you can modify before dispatching), sends it on your behalf, notifies you of any replies, monitors the progress of your complaint, and escalates the issue if needed.
This is achieved through our partnership with Resolver, a complaints management company that supplies the technology. However, the original templates and the logic behind them are developed by us. We are collaborating with Resolver on several projects to merge our complaint-handling expertise with their advanced technology.
What evidence do I need?
You will need:
- Your account number.
- The reason you think you were mis-sold (see the mis-selling checklist above).
- The date you took out the product.
- Copies of your statements or other relevant documents – Resolver lets you attach these before sending off the complaint.
Tips for using the tool
What happens if your bank denies your complaint? If your issue is turned down or you receive no response within eight weeks, Resolver will remind you to escalate the matter to the Financial Ombudsman Service (though you’ll need to handle the escalation yourself).
Having trouble locating your bank? While we’ve included major accounts, Resolver allows you to add missing banks to their system if you notify them through their website. Alternatively, if you prefer not to wait, you can use our template letters to file your complaint directly.
Or use our free template letter
If you prefer, you can send your complaint directly to the bank using our complimentary template letter as a guide.
It’s crucial to recognize that you have the RIGHT to be treated fairly by financial institutions. Reflect on why you may not have received the treatment you deserve.
Contact your bank or visit its website to find the address for the complaints department. Although it’s generally best to submit complaints in writing, don’t worry if that’s not feasible for you. You can call and request that your complaint be recorded formally, and be sure to ask for written confirmation.
There’s no need to be overly formal. Simply explain your issue clearly, directly, and honestly, as if you were telling a friend why you feel wronged. To assist you, we’ve provided a template letter for you to use as a starting point—download it and fill in the details. While it’s helpful to use the template, personalizing the letter with your own words will make a stronger impact.
Template letter: Packaged account reclaims
Important: Keep a copy of the template letter – it’ll be helpful if you end up needing to go to the ombudsman.
However, there’s a vital concept you must grasp. At this point, the act of reclaiming resembles a high-stakes game of ‘Who blinks first?’ It’s crucial, so we’re emphasizing it loudly…
Your bank may say “no”. If so, don’t worry. You can take your case to the ombudsman (full help in section below).
Step 4. Rejected? Escalate it to the ombudsman for FREE
If your bank turns down your complaint, you have the option to escalate it to the independent Financial Ombudsman Service.
This organization is designated to resolve conflicts between consumers and financial institutions. It offers a free, unbiased resolution service. By presenting your case, the Ombudsman will evaluate whether your account and its sale conditions were unfair and determine the appropriate remedy. In many cases where mis-selling is proven, this typically results in a refund.
If you complained using our free online tool, it will help escalate your complaint
If you’ve submitted a complaint to your bank through Resolver, it can assist in taking your issue further. If you either receive a rejection or don’t get a response after eight weeks, Resolver will encourage you to reach out to the Financial Ombudsman Service. Additionally, it will support you in crafting and sending the necessary escalation email.
Didn’t use Resolver? No problem – just fill in a form
If you didn’t use Resolver, then to escalate your complaint you need to fill in the ombudsman complaint form below, you can send it back by post or fill it in online. Also enclose any paperwork to back up your case.
It’s important to note it won’t look at your complaint until you’ve contacted your bank and given it eight weeks to respond.
Tips on filling in the form
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.
If you need help filling this out, you can call the Financial Ombudsman Service helpline on: 0300 123 9123 or 0800 023 4567, and it’ll guide you through the claim, 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.
Ombudsman complaint form: Ombudsman complaint form
Help to fill it in: Complaint form help
What happens next?
The ombudsman will send you a confirmation letter to say it’ll look into your case and get back to you if it needs any more information.
How long will it take?
Sometimes this will take a long time, possibly around a year, but may take even longer. 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.
Is there a time limit for escalating to the ombudsman?
Yes. If you are considering escalating your issue to the ombudsman, be aware that there are specific time limits to observe. You have either three years from the moment you became aware of your right to lodge a complaint, or six years from the date of the incident you are disputing.
Additionally, you must escalate your case to the ombudsman within six months of receiving the bank’s final decision letter. If your complaint falls outside these timeframes, the ombudsman may decide they are unable to handle your case.
The ombudsman turned me down, what next?
Typically, an assigned adjudicator makes the ombudsman’s decision. However, if you are dissatisfied with the outcome, you can request that one of the official ombudsmen review the matter formally. When making this request, provide a written explanation detailing your reasons for disagreeing with the initial decision and include any additional evidence supporting your stance.
The process of obtaining a formal decision from an official ombudsman can be lengthy, as it involves a thorough investigation. Nevertheless, if you believe the original decision was incorrect, it is worth pursuing further. While the bank is required to adhere to the ombudsman’s decision, you still have the option to take legal action if you disagree with the resolution.
Additionally, if you believe the ombudsman mishandled your case—perhaps due to unnecessary delays—you can request a review by a senior manager. If this does not address your concerns, you can escalate the issue to the Independent Assessor, who will evaluate the quality of service you received, but will not review the decision itself.
For guidance on other types of complaints that the ombudsman can assist with, refer to the Your Financial Rights guide.
FAQs
Q – Are these accounts always bad?
A – Absolutely not. In reality, there are times when we actually favor them, viewing them as a cost-effective method for obtaining insurance.
Check out our guide to Top Packaged Bank Accounts to discover which option suits you best. Issues generally arise when individuals are pressured into purchasing these accounts by their banks. However, if you proactively choose the best account for your situation and ensure it meets your needs, you can secure an excellent deal.
Q – Is this the same as bank charges reclaiming?
A – No, that’s a separate initiative. Bank charges refer to the fees imposed by banks and building societies when you exceed your approved overdraft limit. These charges can be quite substantial, reaching up to approximately £15 each, and they can accumulate rapidly, potentially causing severe financial strain for some individuals.
For complete details, consult the Reclaim Bank Charges for Free guide.
Q – Can I claim for a packaged bank account I no longer have?
A – Yes, you can still file a complaint with your bank regarding a mis-sold account, even if you no longer hold the account, provided you can access the relevant documentation. You have the right to pursue this complaint dating back to when the account was active.
However, it becomes more challenging to address issues with a packaged bank account that is older than six years.
Banks often use ‘time limits’ as grounds for rejecting claims. If you need to take your complaint to the Financial Ombudsman Service, you must do so either within six years of the account being sold or within three years of realizing you have grounds for a complaint.
Q – Is there a difference if I signed up online, rather than in a branch?
A – The fundamental questions would remain unchanged. Investigations would focus on what information was accessible when the account was opened, whether it was communicated verbally, in writing, or both.
Aspects such as the clear identification of fees and the details of what the account encompassed are crucial. For online applications, it would involve evaluating the transparency of the displayed information.
Q – I’ve claimed on one of the insurance policies, can I complain?
A – Certainly! The crucial factor in reclaiming is whether the staff provided you with an account that failed to cover the primary benefit you were seeking.
For instance, if you purchased an account primarily for its travel insurance but later found out you weren’t eligible to claim it, the fact that you were covered for breakdown and mobile insurance is secondary. The travel insurance is the essential aspect. According to the ombudsman, each situation will be evaluated on a case-by-case basis, taking into account the overall context.
Q – I was eligible for insurance, but just didn’t use it. Was I mis-sold?
A – The crucial factor to consider is whether you could have utilized the policy. If you were eligible for it but never had a reason to use it, that doesn’t constitute mis-selling—unless you were unaware of having the account in the first place.
That said, there are numerous factors that can render policies inappropriate. Review the “Have I Been Mis-sold?” section to determine if you have grounds for a claim.
Q – Can I claim on someone else’s behalf – if they’re deceased or need help?
A – When the account holder has died, any outstanding funds are included in their estate, and the heir is entitled to recover these funds (the executor should be informed as well). In the absence of a will, the distribution will adhere to the rules of intestacy. However, be aware that there might be difficulties in proving the circumstances of the sale if only the policyholder was involved.
If someone you know requires assistance with their finances and is able to authorize you to act on their behalf, it’s worth pursuing this option.
If the individual has a mental health condition or other issues that rendered a packaged account clearly inappropriate, they are likely to have a valid case.
Q – If I reclaim the fees, can I still keep my account?
A – Although it might seem unnecessary, there’s technically no obstacle preventing you from doing it. However, it’s advisable to explore the top fee-free bank accounts or consider if a more comprehensive account package might suit you better.
Q – Can complaining harm my credit file or punish me in any way?
A – No, you are entitled to voice your concerns and escalate the matter to the ombudsman. Complaints made to the ombudsman will not be recorded on your credit file.
Historical decisions from the ombudsman indicate that such complaints will not negatively impact you. The only potential drawback is that if you apply for another product from the same bank, they will be aware of your complaint. However, based on previous cases, it is improbable that this will affect your application adversely.