Concerns have been raised over the suitability of travel insurance which is sold as part of Packaged Bank Accounts (PBAs).

PBAs are bank accounts that charge a monthly or annual fee, and in return offer a range of features such as travel insurance, mobile phone cover or preferential rates on products such as loans.

However the Mail On Sunday reports growing concerns that with the summer holidays approaching many consumers will rely on travel insurance they receive through their PBA which will not be sufficient to cover them in an emergency situation.

Unlike some standalone travel insurance policies, those sold with PBAs often include geographical exclusions, age restrictions and limits on the duration of the cover. Customers who purchase this type of insurance from their bank are not always made aware of these restrictions. James Daley from consumer group FairerFinance told the MoS: “Age limits are a real problem with travel insurance offered as part of a bank account. Insurers are under more pressure to make customers aware of such upper-age limits. But this wasn’t happening five years ago, which is why we’re now seeing a spike in complaints.”

Indeed there were a total of 454,276 complaints about current accounts reported to the Financial Conduct Authority between July and December 2015 according to the regulator, becoming the second most complained about product after Payment Protection Insurance (PPI).

Some of the reasons given for mis-selling claims have included banks failing to tell customers that a paid-for account was optional, upgrading free accounts to paid-for accounts without customers’ knowledge and account features not being explained properly.

One such example given on the website of the Financial Ombudsman Service (FOS) included a 73-year-old who opened a PBA specifically to use the travel insurance benefits. When she needed hospital treatment on holiday in Australia the insurer would not pay out as there was an upper age limit of 70. The customer complained to her bank that she had not been made aware of this and after the bank rejected her claim the FOS stepped in to uphold her complaint and award her compensation.

Some of the UK’s biggest banks have set aside millions to compensate customers for Packaged Bank Accounts which may have been mis-sold in this way – Barclays has set aside £250m and RBS £300m.

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