Pretty bad – but packaged accounts are not the new PPI
At first glance, the figures are pretty damning.
Complaints to the UK Financial Ombudsman Service about packaged current accounts -0r value added accounts as certain banks prefer to term them – soared by 107% year-on-year to 44,244.
Cue a wave of hysterical headlines and exaggerated copy from elements of the press – both popular and quality – that packaged accounts complaints represent ‘the new PPI’.
It is of course pure bunkum.
According to the Ombudsman, most of the complaints come from customers who allege that they were mis-sold current accounts or magically and mysteriously signed up to accounts without their knowledge.
A fair chunk of the complaints come from customers who allege that they were not made aware of the existence of alternative ‘free-in-credit’ accounts.
Bluntly, that stretches credibility into the land of make believe. About 86% of current account customers in the UK hold ‘free-in-credit’ accounts.
The existence of such accounts is not exactly a well kept secret.
Never before have consumers been better equipped to shop around and compared and contrast the various current accounts on offer from financial services comparison websites.
Instead, what we have is a large chunk of customers – the Ombudsman estimates the figure to be about 60% of complainants – who have chucked in a claim.
When it comes to PPI, the banks have been correctly pilloried, not only for the original mis-selling but for their lamentable and dilatory administration of consumer complaints.
To out the packaged accounts figures into some context: in the year to the end of March, the Ombudsman received 1.6 million PPI enquiries; it took on one in five of these as a new case– a total of 340,899 new complaints, up 3.5% on the year before.
The Ombudsman resolved 438,802 complaints in the same period.
In the past year alone, the Ombudsman sorted out almost 400,000 PPI complaints.
While the majority of cases overall determined by the Ombudsman found in favour of the consumer (51%) –the figure for packaged accounts was an altogether more modest 14%.
That figure suggests two things. Firstly, the banks’ internal procedures for considering customer complaints about packaged accounts are working pretty well.
Secondly, a large majority of the customers complaining about packaged accounts are ‘at it’; pure and utter chancers.
It is a pity that the newspapers have generally not quite picked up on that fact.
Whatever else one might say about packaged accounts, and they are certainly not suitable for all segments of the market, they contribute almost £2bn in fees for the sector a year. They are here to stay. The banks are generally conscious of the need not to mis-sell the product. And they are very definitely not the new PPI.