When Martin Wheatley spoke out on 5 September 2012 against the use of “risky” sales incentive schemes by retail banks, he drew a direct link between these schemes and recent, high profile misselling cases; but he began his speech with a more prosaic story: visiting his local branch to pay a credit card bill, he’d been asked “if you would like to extend your credit, take out more insurance or look at their competitive mortgage rates”.

Prior to this speech, the FSA had already begun to look closely at how bank customers could end up leaving a branch having purchased more financial products than they had originally intended; sometimes even products they had no use for.

On 27 July 2012 the FSA published CP12/17on packaged bank accounts. One in five adults in the UK has a packaged bank account, broadly defined as a retail bank account (typically a current account) that comes bundled with other services: these can be anything from overdrafts to free music downloads or VIP airport lounge access.

It is the packaging of insurance polices with current accounts that FSA CP12/17 is concerned. The bundling of travel insurance policies with accounts sold to customers who would be ineligible to claim under them is presented as a typical complaint, although CP12/17 is not limited to travel insurance.

CP12/17 makes changes to the Insurance Conduct of Business Sourcebook (‘ICOBS’) which were originally proposed in CP11/20 in October 2011. These changes aim to provide the same level of consumer protection to the sale of insurance policies with packaged bank accounts as currently exists for the sale of insurance policies on their own. To read our briefing note, please click here.