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Lloyds halts branch sales of packaged accounts
Patrick Collinson
# Banking
# Banks and building societies
# Current accounts
# Financial Services Authority (FSA)
# HBOS
# Insurance
# Lloyds Banking Group
Lloyds current accounts offering added extras such as travel insurance and breakdown cover for an annual fee will no longer be available from January 2013
Lloyds TSB and Bank of Scotland are to halt the sale of controversial "packaged accounts" where customers are charged as much as £300 a year for benefits such as travel insurance and breakdown cover.
Lloyds is to stop branch sales of "added value" Silver, Gold, Platinum and Premier current accounts from 1 January 2013, although they will still be sold online.
Critics claim branch staff have been under pressure to meet targets to switch customers into the packaged deals, when in some cases the sale is unsuitable.
Others say that when they have tried to make claims on the travel insurance in their account they have been rebuffed.
But a spokesman for Lloyds said the ban on sales was temporary, had nothing to do with mis-selling and had not been the result of intervention by the Financial Services Authority. "It is about the sales process, but it's about changing it so that it aligns with that of the Halifax [also owned by Lloyds]. It is not down to the FSA or worries about mis-selling."
The FSA declined to comment.
A prolonged halt to sales would be a blow to Lloyds, which dominates the market for packaged accounts in Britain. Around 16% of account holders in the UK pay extra for packaged accounts, but at Lloyds, which operates 22m current accounts across all its brands, the figure is understood to be around one third.
The Lloyds Premier account, which includes annual worldwide travel insurance cover, costs customers £300 a year, although the bank's basic Vantage account is free.
The Lloyds spokesman said although the bank does not have a firm date for when it will start selling packaged accounts again, sales would begin again at some point in 2013.
"Embedding this change properly across our business will require us to update our systems, and amend the sales process and training we provide to colleagues.
"Whilst we make these changes, for a short period of time from 1 January 2013, customers will only be able to purchase a Lloyds TSB and Bank of Scotland Added Value Account via the online channel. We are committed to offering packaged accounts as we believe they offer real value to our customers, which is why we expect to fully re-enter the market later in 2013."
Existing customers with packaged accounts are unaffected by the halt on sales and can carry on using them as normal, the bank said.
While the Financial Services Authority refused to comment about Lloyds, it is known that the regulator has been investigating packaged accounts and whether they represent value for customers.
Industry research suggests as many as one-in-three customers who have been sold packaged accounts have not used the extras they are paying for. From next March, on the FSA's orders, banks will be required to check whether customers are eligible to claim on insurance cover before selling them a packaged bank account.
Some have even questioned whether this area could become the next big bank mis-selling scandal when customers realise they've been paying for products they didn't want and haven't used.
Consumer group Which? says it has been analysing the value of fee-charging bank accounts for many years and has concluded "that you can often get the extra benefits cheaper elsewhere, and that some of the 'benefits' just aren't that much use".
Patrick Collinson is money editor of the Guardian and the newspaper's personal finance editor
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