Lloyds Bank halts sales of insurance-bundling accounts

Lloyds Banking Group will temporarily suspend phone and branch sales of so-called packaged current accounts across two of its three brands.

The temporary ban takes effect on 1 January and affects the sales of packaged accounts from Lloyds TSB and Bank of Scotland.

The packaged accounts for these two brands will continue to be sold online, and the account offered by the Halifax brand is unaffected.

Packaged accounts typically include additional products, including travel and mobile phone insurance.

The ban closely follows the FSA’s announcement that it is to impose tougher rules on banks bundling insurance with bank accounts.

From March 2013, banks and building societies will have to 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 regulator is concerned that customers are not always able to use the insurance bundled with the bank accounts, and so are paying extra for services that give them no benefit.

The new packaged account restrictions follow new rules that were published in July this year. These stipulated that banks and building societies must check if customers can claim on insurance cover before selling them a packaged bank account.

However, Lloyds TSB said it had imposed the ban to harmonise the sales process across its three brands, not because of regulatory concerns.

A spokesman told Insurance Times: “We want to have a single sales process across the three brands that will make it simpler for the business, for colleagues and for customers.“

He added: “We remain committed to packaged accounts.”

The Halifax packaged product, Ultimate Reward, is unaffected by the ban because the group is modelling the new sales process for the other two brands on what Halifax currently does.

The spokesman said it had not yet been decided when branch and telephone sales of the products would resume.

A statement from Lloyds said: “Embedding this change properly across our business will require us to update our systems, and amend the sales process and training we provide to colleagues. While we make these changes, for a short period of time from 1 January 2013, customers will only be able to purchase a Lloyds TSB and Bank of Scotland added value account via the online channel. The Halifax ultimate reward current account will remain available through all customer channels.”