Paying the price of increased regulation

Packaged accounts are on the rise and that’s no surprise to anyone – except the poor consumers who are paying for services they never use. As well as ordinary, free current accounts, many lenders are now offering packaged versions. As the name suggests, it’s a package of services that comes with the accounts – and UK consumers are being asked to  pay handsomely for the privilege. 

Recent research from Uswitch found that the cost of packaged accounts to consumers was £530 million a year – that’s a lot of money to pay for something you might not even use. The research suggested that 25 of people did not even use the services on their account packages, because they were already getting these somewhere else.

The thing is with packaged accounts, banks really are able to have their cake and eat it too. The customer has an account, is upgraded and pays for the new package. This also gives banks a chance to push other products. Believe it or not, we’re paying the banks to sell more stuff to us.

Why the sudden move to packaged accounts? Well, it could be that banks are running scared in the wake of recent rumblings from the Office of Fair Trading. First, millions were slashed off their profits by the news that a price cap was to be imposed on late payments to credit cards. That cut the payment from over £30 in some cases to a maximum of £12. The response from lenders has been to get more picky about how they impose those charges. And since current accounts are next under the spotlight, many lenders have started charging up to £30 if a customer goes into the red by as little as a penny a day. Not surprisingly, lenders want to make sure their money is the bank before another ruling goes against them.

All the scrutiny by the OFT and others is intended to make life fairer for consumers, but it seems that while we wait for that day, consumers are continuing to pay through the nose for the privilege of having a bank account.