FSA calls for new insurance selling rules
Retailers suffered a further drop in sales this month but were hopeful that shoppers would loosen their purse strings before Christmas.
The Financial Services Authority (FSA) has proposed new rules to stop banks and building societies selling customers insurance cover along with a bank account that turns out to be 'useless'.
The proposals relate to the selling of 'packaged accounts' - current accounts which are bundled up to include extras like insurance policies and products such as ticket discounts.
The FSA, which regulates the financial services industry, said it was concerned that it was 'too easy' for customers to be sold something they did not need.
It estimates that a fifth of adults in the UK hold such an account - and while some customers get value from the package, others may not.
Sheila Nicoll, FSA director of policy said: "For some people, packaged accounts represent good value and convenience.
"But in other cases customers may find that the insurance cover they have paid for is useless. We are concerned that it may be too easy at the moment for firms to sell customers something they do not understand or need.
"We want to make sure that packaged accounts are only sold to customers who have decided it is the right product for them."
The FSA's consultation document proposes that banks and building societies selling insurance as part of a packaged account will have to check whether the customer is eligible to claim under each policy and share that information with them.
The FSA's proposals also said that banks should provide customers with an annual eligibility statement prompting them to check whether their circumstances have changed and whether the policies continue to meet their needs.