The Financial Ombudsman Service has reported seeing a huge jump in complaints about current accounts over the past year, with packaged accounts a particular problem.
In its annual report, the Ombudsman revealed it had received 35,344 complaints about current accounts in the year to 31st March 2015. By comparison, it received just 19,878 current account complaints in 2014, and 19,560 in 2013.
And it is packaged current accounts which are behind the bulk of them, with 21,348 cases referred to the ombudsman.
Problems with packaged accounts
Packaged current accounts differ from traditional bank accounts, in that you pay a monthly fee in exchange for a host of added benefits.
This may include annual travel insurance, mobile phone insurance, breakdown cover and cashback.
However, many people have been sold packaged accounts which include benefits they can't make use of. As a result new rules had to be introduced a couple of years ago to ensure that banks were forced to tell customers if they did not qualify for some of the benefits, for example if they were too old to make use of the included travel insurance.
The role of claims management firms
According to the ombudsman, around three quarters of the packaged account complaints it received came through a claims management firm. Clearly claims firms have picked up on the disquiet around paid-for bank accounts and see it as a potential replacement for the payment protection insurance (PPI) gravy train.
However, as the ombudsman points out, employing a claims management firm doesn't actually help your chances. Indeed, the ombudsman upholds fewer than half of the cases it receives from claims firms, which is less than its overall uphold rate.
Was the account mis-sold?
According to the Financial Ombudsman Service, it generally isn't immediately clear whether a packaged account represented good value or whether the account holder was worse off for paying the fee. While they may have only been able to use some of the included benefits, the package may have been useful to them overall.
It said it has been working with claims management firms and providers to ensure complaints are not taken to the ombudsman unnecessarily. This involves identifying exactly who has and has not lost out as a result of taking on a packaged account, and said it was "encouraged" by signs that this work is making a difference to the cases passed on.
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Other current account complaints
Packaged accounts are not the only current account issue though.
The ombudsman said it had received many complaints from people who felt that the account provider had not acted positively and sympathetically when they explained that they were in financial difficulty.
The ombudsman said: "Yet again, we have had to explain to businesses that their responsibilities begin once they know their customer is struggling, rather than only once the account is in default."
The report reveals that the ombudsman also received a "substantial" number of complaints about disputed transactions, where account holders claimed they were not responsible for a payment made from their account.
Finally, the ombudsman noted it had received complaints from people who believed they were the victim of fraud as they had noticed transactions on their account that they didn't recognise. However, on investigation this turned out to instead be a legitimate 'continuous payment authority' for a subscription, membership fee or short-term loan repayment.
If you aren't happy, switch!
If you aren't happy with your bank, for whatever reason, don't just take it. Instead shop around for a new account and switch.
Switching now takes just seven working days, and it's absolutely worth it, with accounts offering everything from juicy joining bonuses to interest rates that even beat the top savings accounts.
For more, read The banks and building societies we're all switching to.
How to complain to the ombudsman
The Financial Ombudsman Service is a neutral mediator, which you can take your complaint to if your bank or other financial firm has not satisfactorily settled your problem. You must complain to the firm directly first and give them a chance to tackle the issue before the ombudsman can be brought into the matter.
Earn 5% interest with a current account
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