Not upheld: packaged account pricing and benefit eligibility complaint against THE CO-OPERATIVE BANK P.L.C.

Decision detail

Summary

Mr and Mrs P complained that Co-op Bank continued to charge the full monthly fee for their Privilege Premier packaged account even after Mr P became ineligible for the included travel insurance due to reaching the age limit of around 79 years. They argued the fee should be reduced to reflect that Mr P could no longer access all benefits. The ombudsman did not uphold the complaint, finding that packaged accounts operate on a fixed-fee basis where account holders receive a predetermined package of benefits regardless of individual eligibility or usage. The age limit on the travel insurance falls within legal exceptions for age-based insurance pricing, and since Mr and Mrs P could downgrade to a fee-free account at any time, Co-op Bank was not acting unreasonably in maintaining the full fee.

The Ombudsman's reasoning

The ombudsman reasoned that packaged accounts operate on a 'package' basis where account holders receive a predetermined set of benefits for a fixed monthly fee, and cannot pick and choose individual benefits or have the fee adjusted based on which benefits they use or are eligible for. The age limit on the travel insurance is set by the insurance underwriter, not Co-op Bank, and falls within a legal exception allowing age to be used in designing and pricing insurance products. Since Mr and Mrs P are not locked into the account and can downgrade at any time, they have the option to switch to a cheaper account if they no longer find the packaged account represents good value. Therefore, Co-op Bank was not being unreasonable in maintaining the full fee.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website