Guidance

CMR special bulletin: packaged bank accounts

Published 3 July 2015

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date. Responsibility for the regulation of Claims Management Companies has been taken over by the Financial Conduct Authority.

There has been an increase in activity around claims for mis-sold packaged bank accounts (PBAs) over the last 12 months. As this activity has increased, we have engaged with and audited CMCs active in this area, liaised with the banks receiving the complaints, and discussed with the Financial Ombudsman Service the types of issues arising. We have also spoken to consumers using the services of CMCs to make complaints about PBAs.

Our engagement with the Financial Ombudsman has enabled us to identify a number of areas of concern. This specialist bulletin is therefore intended to provide guidance and highlight some poor practices around the CMC handling of PBA complaints.

Further information about PBAs is available on the Financial Ombudsman website

1. Product knowledge

A PBA is not the same as a payment protection insurance (PPI) policy. Complaints about PBAs should therefore not be approached in the same way. The regulations around the sale of PBAs has changed several times over recent years and we would expect you to understand what rules were relevant at the time of the sale in order to present a complaint properly.

Through contact with your customers and research you should be developing a good understanding of each of the PBA products on the market and associated benefits which should help you gather the right information from your client and present a complete complaint.

2. Customer knowledge

There are usually more elements to a PBA than a PPI policy and therefore more facets to a PBA complaint. You must complete a comprehensive ‘fact find’ with your customer in order to establish what they understand the benefits to be, whether those benefits would have been useful to the client at the time of the sale and/or whether the client had taken advantage of any of the benefits attached to the account.

Benefits will typically include insurance products (travel, mobile phone etc.) and breakdown cover but can include an overdraft facility at a preferential rate amongst other benefits. Even if the customer may not have needed some of the benefits, the packaged account as a whole might still be a good deal for them and you should bear this in mind when gathering information from your client.

As well as whether the PBA was suitable for your client you must also gather what information they recall about how the PBA was sold to them. The client may have documentation about the account or be able to access it online so you should make appropriate enquiries with your client and request documentation where available.

The Financial Ombudsman has published a questionnaire which should help you understand the information needed to determine if a PBA was mis-sold.

As well as establishing that the client was mis-sold the PBA you should also ensure that you confirm that they do not want to retain the PBA and benefits associated with it. You should make it clear to the client that in making the complaint, the PBA and benefits may be cancelled. It is evident that some consumers do not realise this and have said they want to keep the PBA despite a complaint being made. If you fail to obtain this information and ensure the client understands they may lose the PBA and benefits, you may be in breach of the following rules:

• Take all reasonable steps to investigate the existence and merits of each element of a potential claim before presenting it to a third party. (General Rule 2a)

• In seeking information to help pursue a claim you shall ask the client to provide all documents in his or her possession that are relevant to the claim… (Client Specific Rule 17c)

• Where advice is given, advise the client to pursue cases only if it is in the interests of the client to do so. (Client Specific Rule 1e)

3. Data subject access requests (DSARs)

We envisage limited circumstances where it would be necessary to make a DSAR on PBA complaints. Most customers will still be using the account and should be aware of, or at least be able to easily find out, the fees and benefits. If you conduct a detailed fact find with the client, there should be little need to make a DSAR which is likely to delay the conclusion of the claim.

You are required to act responsibly (General Rule 2). Although we accept there may be some circumstances where a DSAR is necessary, where we feel the process is being abused and DSARs are being made unnecessarily or without justification, we will take action.

4. Making the complaint

Having obtained the information from your client, you should be in a position to make a detailed and specific complaint to the bank. The complaint should set out the circumstances around the sale of the PBA and clearly explain why the client believes the PBA was mis-sold to them.

The Financial Ombudsman issued an open letter to CMCs in September 2013 setting out basic expectations on PPI complaints. The same principles apply to PBA complaints. The Financial Ombudsman requires you to provide accurate, as complete as is possible, and specific information about each individual complaint. We expect you to provide the same standard of information to the bank when initiating the complaint.

Failure to do this is likely to be a breach of General Rule 2b which requires you to make representations to a third party that substantiate and evidence the basis of the claim, are specific to each claim and are not fraudulent, false or misleading. Using generic, non-specific letters or short checklists to make complaints in the first instance is unacceptable and also likely to be in breach of this rule

5. Financial Ombudsman PBA complaint form

The Financial Ombudsman published a PBA complaint form at the beginning of the year and you must use this form when escalating PBA complaints to them.

The complaint form should assist you with providing a detailed account of the complaint, but this information should have already been given to the bank that rejected the complaint. As well the details of the complaint, you should provide the Financial Ombudsman with the reasons why you think the business got it wrong. It is not enough just to say you disagree with them.

If you are not using this form when escalating complaints to the Financial Ombudsman, not completing it fully, or failing to explain why you think the decision was wrong, you will be in breach of General Rule 2c. This rule requires that claims referred to any recognised Ombudsman must comply with their procedures including specific, appropriate and relevant information on individual claims.

Do not send the final page of the Financial Ombudsman complaint form to your clients on its own at any stage of the process. You should only ask your client to sign that page with the rest of the form attached, either completed by you or when asking your client to complete it. By signing the declaration, your client is declaring that the information in the rest of the complaint form is accurate.

We have concerns about the practice of asking clients to sign the declaration without the rest of the information and depending on the circumstances, this may be considered a breach of General Rules 1 and/or 2 (acting dishonestly and irresponsibly).

6. Financial Ombudsman decisions

You should be learning from the PBA complaints process and be able to make an assessment about the likelihood of success where the complaint has been rejected or the business has made an offer (for example if the bank feels that an alternative, cheaper PBA was more suitable for your client).

You should advise your customers based upon your experiences (where appropriate) and make recommendations to them on this basis. You should not be routinely referring all rejected cases to the Financial Ombudsman. General Rule 2c requires you to take account of relevant past decisions when referring claims to the Financial Ombudsman.

We expect you to have a good knowledge of your cases that are currently with Financial Ombudsman. Where decisions are made on common facts, you should be able to review whether the same principles will be applied to other similar cases. Where this has resulted in the Financial Ombudsman agreeing with the final decision of the bank, we expect you to take appropriate action in respect of similar cases. The banks are expected to do the same for upheld complaints.

We will be alerted by low uphold rates at the Financial Ombudsman and act where advice is inappropriate and customer expectations are being unnecessarily raised.

Abiding by these principles and complying with the rules on making PBA complaints should help ensure that your clients receive a good service from you with swifter outcomes.