March 11 2014 Latest news:
Monday, December 31, 2012
LLOYDS TSB is temporarily pulling the plug on sales of its paid-for current accounts today amid a clampdown on the industry by the City regulator.
The banking giant charges up to £300 a year for the accounts, which include add-ons such as travel and mobile phone insurance and car breakdown cover.
Lloyds will temporarily stop offering its “packaged” accounts in branches and over the phone, although customers can still sign up for them on the bank’s website.
The bank has previously explained that it wants to put system changes in place and bring the way it sells such accounts into line with its sister bank, Halifax.
It has rebutted suggestions that the move follows concerns that some accounts may possibly have been mis-sold, and said it was also unrelated to a crackdown on sales of packaged accounts by the Financial Services Authority (FSA).
From March 31, banks will be forced to provide packaged account customers with annual statements to make it easier to check that products are suitable.
The FSA’s new rules will also mean providers have to check whether customers are eligible to claim on insurance cover before selling them a packaged account.
This follows concerns that people are being sold perks that they will never be able to claim on, such as travel insurance being sold to people who are too old to fit the criteria.
A Lloyds spokesman previously said: “It is not about the FSA or mis-selling, it is about moving to a unified process within the group.”
Lloyds and Halifax have had two different sales processes and Lloyds is moving to the way that Halifax makes its sales.
Halifax sales staff offer their customers a list of accounts and let them make their own selection, which is a process known as “informed choice”, while Lloyds staff have been recommending different accounts to customers. Lloyds plans to re-enter the market at some point next year, although it has not confirmed exactly when this will be.
An estimated three million customers pay for one of four different packaged accounts offered by Lloyds, ranging from its Silver account, which charges £9.95 a month, to its Premier deal, which carries a £25 monthly fee. The bank has said that existing customers will be unaffected and can continue to use their accounts and their benefits as normal.
Packaged accounts are held by a fifth of adults in the UK and the ombudsman receives around 30 complaints a week about packaged accounts.