The huge rise in consumer complaints about fee-paying current accounts has raised questions about the benefits of the accounts, as well as the sales tactics of banks which promote them.

NAOMI CAINE

The huge rise in consumer complaints about fee-paying current accounts has raised questions about the benefits of the accounts,  as well as the sales tactics of banks which promote them.Complaints about the so-called PBAs, or packaged bank accounts, have soared by 278per cent from 5,667 to 21,348 over the past year, according to the Financial Ombudsman Service.

Rachel Springall, finance expert at Moneyfacts.co.uk, says: "It's clear to see that there are many unhappy packaged account customers out there who feel they are not getting the service or deal they expect."

PBAs work like current accounts but they charge a monthly or annual fee and include a range of benefits, typically travel and other insurance, car breakdown cover, and possible preferential loan or savings rates.

The Lloyds Bank Silver Account, for example, costs £9.95 a month and includes travel insurance, breakdown cover, mobile phone insurance and card protection. Or there's the Select Silver Account from RBS, which comes with European travel insurance and preferential rates for travel money for a fee of £10 a month.

The Financial Conduct Authority introduced rules to safeguard the consumer from pushy sales tactics in 2013.

However, many of the complaints to the Financial Ombudsman Service concern mis-selling. For example, customers are sometimes told that the packaged account is a condition of a mortgage or other loan. The details and cost are often not clearly explained, or a consumer might be sold a PBA even though they are not eligible to claim on the insurance. Some customers have also been moved onto PBAs without their permission.

There are about 88 packaged accounts on the market, up from 56 a year ago, and they can work well for some people. But before you sign up you should consider whether you would use any of the benefits that come with the account, or if you already have some of the products included in the package. You might, for example, already have travel insurance or breakdown cover. Identity theft cover, often thrown into the package, is widely seen as of little use.

It's also essential to read the terms and conditions of any insurance to make sure you would be eligible to make a claim. There are usually age limits on any travel insurance. Customers also typically have to activate an insurance policy before it is valid, or register their details before the cover is live.

Ms Springall says: "Upfront deals can be enticing, but a paid-for overall package is pointless if customers find they can't use the benefits, such as travel insurance that carries restrictions on passenger age and trips."

Do your sums, too, by comparing the annual cost of the packaged account with how much you might pay to buy each of the relevant benefits separately.

Anyone who is considering a PBA might want to look at the FlexPlus from Nationwide building society. It costs £10 a month and comes with European travel cover, mobile phone insurance and breakdown cover. There is also 5 per cent interest on credit balances of up to £2,500 - though that only lasts 12 months.

However, holders of Nationwide's regular Flexaccount can get European travel insurance free (as long as they pay in £800 every month).

TSB's Silver Account at £9.95 a month includes a £50 interest and fee-free overdraft buffer, while the Platinum version at £17 a month upgrades insurance covers and widens the buffer to £300.

Santander's 123 account charges only £2 a month and offers tangible cash benefits in the form of up to 3per cent interest on balances up to £20,000, and cashback for direct debit payment to utilities.

If you have a complaint about a packaged account you should write to the relevant bank or building society. You can print off a template complaint letter from websites such as www.which.co.uk and www.moneysavingexpert.com

If you are unhappy with the bank's response, you can take your case to the independent Financial Ombudsman Service (www.financial-ombudsman.org.uk).

Specialist claims firms do advertise their services to dissatisfied customers, offering to handle any complaint. But it's nothing you couldn't do yourself and the firm will take a commission.

The Herald revealed in January that cold-calling by claims management firms may be generating much of the spike in complaints, with 75 per cent of PBA complaints now coming via the claims management industry, almost matching its share of PPI cases with the ombudsman which is 77 per cent. Yet the number of PBA complaints upheld by the ombudsman has fallen sharply from 77 per cent to 46 per cent, despite the underlying number of cases doubling in that time, suggesting a high proportion of speculative or phoney complaints.

Mike Dailly, principal solicitor at Govan Law Centre, warned at the time: "Customers with these accounts could be hoodwinked into paying upfront fees to a CMC (claims management company) and they may be in for a surprise when they discover they are entitled to nothing, or what they may get is a very small sum after a very long wait."

Last autumn, the Claims Management Regulator issued warnings to some firms for failings over PBA complaints, which included "accepting claims from unauthorised businesses, making mis-sold claims without thoroughly substantiating them, and using generic letters of claim".

Earlier this year the Advertising Standards Authority banned three internet adverts from a company claiming that customers could receive £3,542 in compensation over Lloyds packaged bank accounts and could quickly find out their eligibility by clicking on a link.

Citizens Advice published a critical report on claims management companies last year in which it highlighted a pensioner who had been charged £250 as a "non-refundable membership fee" on an unsuccessful PPI claim.