Banks rake in millions selling rip-off accounts to 2.6m OAPs

UP TO 2.6million pensioners have been sold rip- off bank accounts that can cost them as much as £25 a month.

A Money Mail investigation revealed that over-65s are routinely being signed up to accounts with features they cannot use or do not want.

In many cases people over 70 are paying for travel insurance that does not cover them. In other cases, customers who are blind and unable to drive are being sold policies with breakdown cover. The hugely expensive deals are even being pushed on the disabled.

Estimates suggest banks are making at least £300 million a year from accounts sold to the elderly. Last night experts suggested the scandal would be the next PPI.

So- called packaged current accounts offer perks such as insurance and better rates on loans or savings. Customers typically pay a monthly fee of between £5 and £25 for a combination of worldwide travel, mobile phone and car breakdown cover.

The accounts are very profitable for banks and have been sold to just under 11million people.

Research from consumer experts Mintel indicated that one in four of these customers – roughly 2.6million people – were over-65.

However, experts say many of the deals the elderly have been sold contain catches that can invalidate the extras. The Financial Ombudsman Service forced banks to pay compensation in nearly 1,500 cases in the six months to September.

It said one 73-year- old woman upgraded to an account with travel insurance.

She was rushed to hospital while visiting her daughter in Australia but when she called her insurer, she was unable to claim for medical expenses because of her age.

In another case, a pensioner who had a stroke and was unable to drive or go on holiday was billed £2,400 over eight years for an account with AA cover and travel insurance he could not use.

Experts fear huge numbers of pensioners have been pushed into buying packaged accounts through aggressive sales tactics. Complaints about the accounts to the disputes watchdog have rocketed to around 1,000 a week.

The banks have already set aside £825million for paying customers who complain.

Justin Modray, of f i nancial website Candid Money, said: ‘Banks who are mis- selling dud deals to the elderly are taking advantage of some of their most loyal customers.

‘ This i s another example of banks putting profit before people. Often customers get very poor value for money.’

The scandal emerged after a major push to get people to switch banks was revealed to have flopped. Despite a high-profile advertising campaign, switching numbers dropped 10 per cent last year. In 2014, 1.15million switched. But last year the number who changed banks fell to 1.03million.

A spokesman for the British Bankers’ Association said: ‘Packaged accounts can offer convenience and great value, but it’s always a good idea to consider how many of the benefits will be directly of use to you – particularly if your circumstances have changed.

‘If anyone has any doubt they should shop around and see if there is a better product.’

‘Very poor value for money’