The Financial Conduct Authority (FCA) has published details of how firms have responded to the findings of its thematic review into packaged bank account (PBA) complaint handling.

In October 2016, the FCA published the results of a thematic review into PBAs. This review found that for complaints which alleged that a PBA had been mis-sold, firms only achieved fair outcomes in 44% of cases.

The FCA’s major concerns included:

  • Weaknesses with how firms recorded the investigation
  • Failing to gather all of the required information to investigate the complaint
  • Not giving the benefit of the doubt to the customer where the two sides disputed what actually happened during the sale
  • Staff failing to follow firms’ complaint handling procedures

Now, in July 2017, the FCA has reported on the progress made by firms in improving standards since the thematic review. The regulator says that it “recognised that firms had been committed to making improvements”, and adds:

“Our follow up review indicates firms have made progress in how they investigate complaints. For example, we found firms had improved their approaches to gathering customers’ testimony.”

However, the FCA has identified two key areas in which firms can still make improvements to their PBA complaint handling practices. It suggests that many firms could still make improvements to the audit trail in their complaint files, and adds that the quality of final response letters could be improved.

The final response letter is the document in which the firm explains to the customer whether it is upholding or rejecting the complaint, and its reasons for doing so. The FCA recommends that final response letters should:

  • Explain what the firm understands the customer’s reasons for making the complaint were
  • Explain the investigation process the firm followed in a series of logical steps
  • Fully address every separate point the customer made in their original complaint
  • Make use of sub-headings or sign-posting where appropriate
  • Be tailored to the specific circumstances of the customer’s complaint, rather than containing lots of standard, generic text

Many claims management companies (CMCs) have been active in the area of PBA mis-selling claims in recent years, however the Financial Ombudsman Service reported that the overall number of PBA complaints fell by 54% in 2016/17 when compared to 2015/16, from 44,244 to 20,284. Only 37.5% of the 2016/17 PBA complaints were made via a CMC, down from 62% in the previous year. The FOS upheld 19% of the PBA complaints it closed in 2016/17, compared to 14% in 2015/16.

PBAs are bank accounts where the customer pays a monthly fee in exchange for receiving a number of benefits, such as travel insurance, breakdown insurance or insurance for electronic gadgets. However, there have been a number of cases of customers being sold PBAs where they cannot claim on the associated insurances, or where they were either told by the firm that there was no alternative to a PBA, or were ‘upgraded’ to a PBA without their knowledge or consent.

In response to some of these concerns, since 2013 firms selling PBAs have been subject to new rules. They must now establish whether applicants would be eligible for each of the individual insurances offered under an account before selling it. Firms must also issue annual eligibility statements to account holders confirming whether these customers remain eligible to claim on the various insurances.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.