The Financial Services Authority (FSA) said that the "annual eligibility statement" (AES) should not be bundled together with other documentation banks distribute to consumers. The regulator said that the "first annual mailing cycle" to which the new requirement relates will begin on 31 March 2013.
"Our proposal that the AES should be provided as a standalone document in a separate mailing was based on evidence which tells us that too much information (at the same time) creates complexity for consumers and it does not help them focus on what is important," the FSA said in a new policy statement (26-page / 502KB PDF) on packaged bank accounts.
"A combined statement is likely to be several pages long and contain a lot of different information. It is, in our view, therefore not the most helpful way to focus the customer’s attention on the specific eligibility criteria (qualifying requirements) to claim each benefit under each policy in the package. The rule would not prevent a firm from providing the customer with such a combined annual statement in addition to the separate AES. This might meet a different need for the customer to have an overall summary of the costs and benefits of their package but we do not agree that it would achieve the intended outcome of the AES," it added.
Packaged accounts are current accounts bundled with a range of other products such as travel or mobile phone insurance, mp3 downloads and discounts on tickets for events; in many cases in exchange for a monthly fee. They can also include preferential terms for other financial services, such as overdrafts or mortgages.
Banks will also have to inform customers when they are approaching the age limit for making a claim under a travel insurance policy that is packaged together with a bank account, the FSA said. It said that this would "be of significant benefit for older customers". Banks should also remind customers to check the age of any family members that are supposed to be covered by a travel insurance policy in order to ensure that they are still eligible for protection, it said.
"When a firm is arranging insurance as part of a packaged bank account it must specify the demands and needs of the customer," the FSA said. "In our view, if the customer’s need is for their family members to be protected, a firm will need to gather relevant information from the customer to assess whether the policy meets their needs – although we do not prescribe in detail how they record or retain this information. This is the case whether the sale is advised or non-advised."
The FSA also said that it would also be working with firms to change the way they advertise packaged bank accounts to consumers.
"We think that this will help [consumers] when choosing [their] bank account and improve [their] understanding of the costs and benefits of a packaged bank account compared to a non-packaged bank account," the regulator said.
Earlier this year the FSA set out new rules that will require bank sales advisers to check whether the customer is eligible to claim under each bundled policy before making a sale. The sales adviser will have to share that information with the customer. If the adviser intends to recommend a particular policy within the package the adviser must establish whether each policy is suitable for the customer and alert them if some are not. Those rules take effect from 31 March 2013.