FSA to restrict how banks sell bundled insurance

The FSA has finalised new rules to restrict how banks and building societies sell insurance bundled into packaged accounts.

In July the regulator published rules that said banks and building societies must check if customers can claim on insurance cover before selling them a packaged bank account. 

Now the FSA has bolstered these rules to say that banks and building societies must send customers a separate yearly statement to show if they are still eligible for insurance bundled into packaged accounts.

Banks will also have to alert customers if they have become too old to claim on bundled travel insurance, or if customers will reach the age limit that year.

The new rules will start in March 2013.

Packaged accounts are current accounts bundled up with a range of insurance policies and other features, such as overdraft facilities or music downloads.

About one in five people in the UK owns a packaged account.