It's looking more and more like paid-for current accounts could be the next mis-selling scandal

Banks are running scared.

The headlines are pretty stark. Paid-for currents accounts could become the next bank mis-selling scandal, according to almost identical headlines in the Daily Mail and the Telegraph. The source for this gloomy prognosis is the annual report from the Financial Ombudsman Service (FOS). According to the FOS, it has received a record number of complaints from customers unhappy with their paid for current accounts or packaged accounts.

So just how many people did complain about their packaged current account  - or added value account (AVA) as banks prefer to call them - in the past 12 months? The answer is the grand total of 1,629. Not good, but hardly on the scale of PPI claims. In the last year, the FOS received a staggering 379,000 complaints about PPI. To date, UK banks have required to set aside more than £12bn (and counting) relating to PPI claims that now exceed 700,000 complaints. To put the AVA figure in context, taking into account multiple and joint current accounts in the UK, the total number of current accounts is about 60m. Of these, somewhere around 17 per cent are AVA’s.

In calculating how much these accounts are worth to the banks, the figures do start to get interesting. Research from the consultants Defaqto shows that since 2008, the average monthly fee for an AVA has shot up to £15.11 from £12 four years ago. With 10.2m packaged accounts costing an average of £181 a year to run, this product is worth around £1.85bn to the banks in fees. These are fees that UK banks can scarcely afford to put at risk by another bout of mis-selling They would surely not be so daft as to put this revenue stream at risk Or so one would hope.

Since November 2009 there have been more packaged accounts available than standard, free in-credit current accounts. By April this year, there was 68 different AVA’s on offer on the UK market compared to 63 free-if-in-credit current accounts. But in the past few months, a number of UK banks have been keen to distance themselves from AVA’s. The new kid on the UK banking block, Metro Bank, ditched its £12.50 per month packaged account offering called Metro Bank Plus last December.

Meantime, market leader Lloyds Banking Group – it has a market share of around 1 in 3 AVA’s - pulled its AVA accounts from sale in its branches and over the phone from the start of the year. At the time, Lloyds said that sales suspension would be for what it called a "short period". Almost six months later, to the glee of the more excitable tabloid press (in particular the Mail), sales of the product remains suspended in-branch.

One might reasonably ask: how long does the bank require to re-train its branch staff not to run the risk of mis-selling a packaged account? Elsewhere, Santander launched what comes as close you will get to a genuinely innovative new bank product, the Santander 123 current account. It charges customers £3 per month to run and offers a bundle of benefits, such as cash-back on certain purchases.

Do not however dare to suggest to Santander that the 123 account is an AVA. The party line from Santander is that it does not now offer packaged accounts. The FOS has certainly stirred things up suggesting that some bank staff have switched current account customers to AVA’s without their knowledge, with many only becoming aware of the switch when they check their current account statement. It is also claimed that AVA’s have been sold to customers for whom such a product is not appropriate.

A number of banks have also been running scared when asked to discuss their strategy towards selling packaged accounts: Barclays being a notable exception.

In summary, it is far too early to be rushing out headlines suggesting that AVA’s are the next major banking scandal. The regulator, the Financial Conduct Authority, is already on the case and now requires banks to send AVA customers a yearly statement so that folks can see if they are benefitting from such accounts. If any banks are dumb enough to dare to mis-sell AVA’s in the future, they will be hung out to dry – and will have nobody but themselves to blame.

Meantime, just in case you are tempted to ‘upgrade’ your ‘free’ current account to any product containing any word such as Gold, Platinum, Select, Privilege, Ultimate etc: do your sums carefully before you sign up. And read the small print - just in case it is not for you.

 

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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Four times Owen Smith has made sexist comments

The Labour MP for Pontypridd and Jeremy Corbyn’s Labour leadership rival has been accused of misogynist remarks. Again.

2016

Wanting to “smash” Theresa May “back on her heels”

During a speech at a campaign event, Owen Smith blithely deployed some aggressive imagery about attacking the new Prime Minister. In doing so, he included the tired sexist trope beloved of the right wing press about Theresa May’s shoes – her “kitten heels” have long been a fascination of certain tabloids:

“I’ll be honest with you, it pained me that we didn’t have the strength and the power and the vitality to smash her back on her heels and argue that these our values, these are our people, this is our language that they are seeking to steal.”

When called out on his comments by Sky’s Sophy Ridge, Smith doubled down:

“They love a bit of rhetoric, don’t they? We need a bit more robust rhetoric in our politics, I’m very much in favour of that. You’ll be getting that from me, and I absolutely stand by those comments. It’s rhetoric, of course. I don’t literally want to smash Theresa May back, just to be clear. I’m not advocating violence in any way, shape or form.”

Your mole dug around to see whether this is a common phrase, but all it could find was “set back on one’s heels”, which simply means to be shocked by something. Nothing to do with “smashing”, and anyway, Smith, or somebody on his team, should be aware that invoking May’s “heels” is lazy sexism at best, and calling on your party to “smash” a woman (particularly when you’ve been in trouble for comments about violence against women before – see below) is more than casual misogyny.

Arguing that misogyny in Labour didn’t exist before Jeremy Corbyn

Smith recently told BBC News that the party’s nastier side only appeared nine months ago:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.”

Luckily for Smith, he had never experienced misogyny in his party until the moment it became politically useful to him… Or perhaps, not being the prime target, he simply wasn’t paying enough attention before then?

2015

Telling Leanne Wood she was only invited on TV because of her “gender”

Before a general election TV debate for ITV Wales last year, Smith was caught on camera telling the Plaid Cymru leader that she only appeared on Question Time because she is a woman:

Wood: “Have you ever done Question Time, Owen?”

Smith: “Nope, they keep putting you on instead.”

Wood: “I think with party balance there’d be other people they’d be putting on instead of you, wouldn’t they, rather than me?”

Smith: “I think it helps. I think your gender helps as well.”

Wood: “Yeah.”

2010

Comparing the Lib Dems’ experience of coalition to domestic violence

In a tasteless analogy, Smith wrote this for WalesHome in the first year of the Tory/Lib Dem coalition:

“The Lib Dem dowry of a maybe-referendum on AV [the alternative vote system] will seem neither adequate reward nor sufficient defence when the Tories confess their taste for domestic violence on our schools, hospitals and welfare provision.

“Surely, the Liberals will file for divorce as soon as the bruises start to show through the make-up?”

But never fear! He did eventually issue a non-apology for his offensive comments, with the classic use of “if”:

“I apologise if anyone has been offended by the metaphorical reference in this article, which I will now be editing. The reference was in a phrase describing today's Tory and Liberal cuts to domestic spending on schools and welfare as metaphorical ‘domestic violence’.”

***

A one-off sexist gaffe is bad enough in a wannabe future Labour leader. But your mole sniffs a worrying pattern in this list that suggests Smith doesn’t have a huge amount of respect for women, when it comes to political rhetoric at least. And it won’t do him any electoral favours either – it makes his condemnation of Corbynite nastiness ring rather hollow.

I'm a mole, innit.