Nationwide launches charges account


NationwideBritain's biggest building society is to introduce regular charges on its current accounts for the first time.

Nationwide's FlexPlus account, which carries a £10-a-month fee, is being launched on to the market at a time when "packaged" products have come under fire and are under close scrutiny from the City regulator.

The building society is ramping up competition in the current account market in order to drive up its share from 7% to around 10% by 2015.

Nationwide has reported "record" numbers of people switching to it, many of whom are looking for an alternative to scandal-hit banks.

The new account, which is available from Monday, pays credit interest of 3% AER (annual equivalent rate) on credit balances up to £2,500. Customers can also get a fee-free arranged overdraft for the first three months and a £100 fee-free limit will apply after this time.

The package of perks with the account includes family cover on worldwide travel and mobile phone insurance. Breakdown cover and access to preferential deals such as savings rates and mortgages are also included.

Packaged account sales have been criticised for pushing add-ons to customers which they will never be able to use, such as travel insurance for people who are too old to qualify.

However, Nationwide said that it has worked with the Financial Services Authority (FSA) to put the account together and pointed out that some rival deals on offer are charging double its fees.

A spokeswoman for the society said that with packaged accounts making up 14% of the market, the new account will fill a "gap in our proposition". She said Nationwide is not planning to introduce any regular fees on the rest of its current account range, adding: "We recognise (packaged accounts) are not for everybody."

Which? executive director Richard Lloyd said: "Banks and building societies must be completely upfront about what is and isn't included in a policy when they are selling packaged accounts. Customers shouldn't be sold policies that they don't need or can't use. We welcome the change in regulations, which will protect consumers from being sold a packaged account when they are not eligible to claim on the insurance cover. But we want to see regulators rigorously enforcing the rules to prevent mis-selling and taking tough action against providers who continue to link staff bonuses to the sale of these products."

© 2013 Press Association