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FSA unveils packaged bank account crackdown

Banks and building societies will be required to check whether customers are eligible to claim on insurance policies sold as part of packaged accounts under new FSA rules.

One in five consumers hold a packaged bank account, where a current account is bundled up with insurance and other features such as overdraft facilities.

From 31 March next year, banks and building societies will have to check whether customers being sold packaged accounts are able to claim on the insurance.

Sales staff recommending the policies must establish whether each policy is suitable for the customer and inform them if the policies are unsuitable.

Banks and building societies will also be required to give customers an annual eligibility statement setting out the claim requirements for the policies under the package.

In addition to the new rules, the FSA is consulting on whether annual eligibility statements should be sent as a separate mailing to customers.

FSA director of conduct policy Sheila Nicoll says: “The new rules will make sure customers know what they are buying.”

Roxburgh Financial Management branch manager Garry Webb says: “Protection needs to be based on advice. It should not be sold as part of a packaged deal.”

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