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Watch out for bank accounts with hidden charges

The Financial Services Authority (FSA) warns that bank accounts which charge fees for extra benefits, such as insurance, may be mis-sold. Whilst packaged accounts might offer value for some customers, for others they may not benefit at all and even be disadvantaged by them. Yet around 15% of the adult population already have these accounts.

The conclusions come as part of the FSA’s Financial Risk Outlook for 2010, which maintains that the financial system, and the firms operating within it, will remain under immense pressure over the coming years by the effects of the credit crunch and the recession. In order to restore profits, some firms are trying to sell inappropriate policies and products to their customers, who might find the terms and conditions difficult to understand.

The FSA said, ‘Consumers could be better off purchasing products individually or not at all’, adding, ‘And some may find where the add-ons are insurance products, they do not provide the expected level of cover’.

Winter weather insurance payout hits £650m

Insurers paid £650m from 335,000 claims made between 18 December and 13 January as a result of the particularly harsh and often treacherous weather conditions this winter. According to the Association of British Insurers (ABI), £395m worth of claims were from motorists whose vehicles were damaged on slippery roads.

The ABI said 66,600 claims were from homeowners and business owners for damage to property, amounting to £255m, which is double the figure insurers would expect for this time of year.

Nick Starling of the ABI said, ‘Insurers have paid out nearly £1bn to customers following bad weather this winter, as the heavy snow came weeks after the flooding in Cumbria’.

 

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