New rules set out by the Financial Services Authority (FSA) for banks and building societies offering packaged accounts came into effect on 31 March.
Under the new policies banks and building societies must:
- Check if the customer is eligible to claim under each policy and share the information with them;
- Establish if the policies offered in the package are suitable for the customer and alert them if some are not, and
- Provide customers with an annual eligibility statement that informs customers of the terms and conditions of the packaged account.
This should prompt customers to check whether their circumstances have changed and if they should continue with the policy.
Packaged accounts are current accounts that offer extra products such as insurance policies, overdraft facilities and music downloads.
The FSA estimates that one in five current account holders subscribe to packaged accounts.
Sheila Nicoll, director of policy, FSA said: "These products are often referred to as upgraded accounts but if you end up paying for an element you can’t claim on, it’s money down the drain. The new rules will make sure customers know what they’re buying."
These measures, introduced by the FSA, will be overseen by the Financial Conduct Authority, which took over from the FSA on 1 April.