Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%
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Author: Internal Customer Services Agent
Are you paying too much for your current account
For many years now some consumers have been paying a monthly fee for their current accounts with the major banks. Although most of the major banks offer accounts which are not applicable to a monthly fee for the service of conducting banking facilities, many millions of consumers continue to sign up for the privileges and extras offered by the bank as part of the service provided for banking with them. In recent times consumers have become savvier in their approach to their banking needs and this is highlighted through the continued increase in the number of consumers who use online banking facilities and mobile banking based applications. Fast becoming our preferred method of managing our money, these online based facilities give us the capabilities to move money, make payments, track our spending and much more. As such in recent times consumers have begun to more openly question why there are fees attached to the bank account they possess and further still; what exactly is the benefit to them. The banks were booming in terms of money earned from account fees in the mid-90’s with 1 in 2 consumers signing up to a current account with extras such as travel insurance and breakdown cover (to name a few). In the vast majority of cases these account extras were presented as a privilege and therefore of value to consumers in some form or another and as such many millions of us agreed to and continue to pay account fees each and every month right up to this day.
Last year it was reported at as many as 10 million consumers have fee based bank accounts and this figure continues to raise but are we really getting true value for the money we pay month in and month out? This has been a hotly debated question in more recent times with many believing that, in fact, many of us do not use nor benefit from the accounts which we are paying for. The Financial Conduct Authority watchdog recently reported that the dispute of these fees has risen by 27% in the last year alone and the banks are now continuing to have to repay those customers who have been effected. It would appear through their independent research it has been discovered that a whole host of consumers have taken up fee based bank accounts to gain access to overdrafts, credit cards and loans, when in reality the fees being paid did not guarantee nor did they directly grant access to such services. Instead the fees being paid were for specific services offered by the bank; some of which were not even relevant to the customer with whom the account is held. Take for example cases where consumers have agreed to fee based accounts where breakdown assistance is provided, in many cases it was later discovered through the Financial Conduct Authority’s watchdog that many consumers with such extras did not even drive at the point of being offered the cover. These sort of examples are not corner cases and this investigation only continues to pick up steam. In the second half of last year £269,000.00 was paid out to customers who had wrongly been paying for a service via their current account, offering privileges they simply did not need or could not use.
With all of the above in mind it is now more worthwhile than ever to investigate if you have been effected by this particular example of mis-selling. Currently banks will typically hold records that date back to 2001 and as such will be able to see if a fee based account has ever been maintained and furthermore still active. The first port of call is to communicate with your bank directly whether this be in person or via telephone. Given the number of us who are used to dealing with financial matters via an internet based means or telephone, making the call to your bank is an important first step. Explain the circumstances and ask for an explanation as to what is currently, and has previously been the case for your current account. For those of us who can deem that a service has certainly been provided but not used; there is likely to be grounds for an immediate complaint and this should be communicated at the start of the telephone call so you ensure you can express your concerns to the correct department and individual. For those do not want to communicate with the bank directly, you may want to investigate third parties who are in place to handle these sort of claims, however, if you choose this option, they may charge up to 30% of any compensation you win, which could be quite a large chunk. Also remember, even if the bank say no, and you still disagree with their reasons, you can refer your case, free of charge, to the Financial Ombudsman Service for independent arbitration.