Fee-charging accounts

Bank customers have typically been pushed into signing on to packaged accounts. Such accounts charge a monthly fee in exchange for a relatively wide variety of services.

Hitherto, regulators have been faffing about, showing no concern for the convenience of the products, let alone for the insurance eligibility usually contained.

It seems that, given public awareness and better understanding of the bank business, today could be the appropriate time to tighten the rules.

European governments are gradually introducing severe restrictions ranging from how to manage the marketing side, to the legal warnings, so as to keep clients in the loop on how beneficial the products are, depending on their particular circumstances.

If, for instance, travel insurance is contained inside the package, it is crucial not only to check the eligibility of the client when the contract is signed, but also throughout the lifetime of the contract.

It is common knowledge that fee-charging accounts have been flogged by banking staff to people who didn't even need them, under the pomposity of a service crammed with endless offers, discounts and the like. Such aggressive commercial practices may soon become ancient history.

Historically, banks used to make their profit from the traditional business of intermediation between people short of money, either to invest or to spend, and clients with a surplus of liquidity, looking for an interesting return on their investments. As the gap between the rates charged on the loans and the interest paid on the deposits, has been steadily narrowing, banks have begun to drain their minds into a profit-making quest, so as to have a leg up on the competition.

That was the outset of bank fees along with keeping a commercial eye on ways to make the products more appealing.

With the introduction of tougher rules, marketing departments are trying to revamp the packaged accounts before ruling them out. As a client, shop around before making your mind up about services that you may not utilize, and be on the ball about possible changes that could leave you out of the game.