'Packaged' bank accounts come with insurance that can be unusable – and customers could demand their money back.

More than 10 million customers with paid-for bank accounts will receive letters assessing their eligibility for the products within the next 18 months, potentially sparking a scramble for compensation to rival the PPI mis-selling scandal. The Financial Services Authority (FSA) said last week that it would force banks to send out annual letters to new customers who buy so-called "packaged accounts", telling them whether or not they are able to use the benefits that they are paying for. It has now emerged that more than 10 million existing customers with these accounts must also be sent yearly "eligibility" letters, starting from next March.

"We hope this will create much more clarity," an FSA spokesman said, conceding that it was "very possible" that many customers would ask for their money back if they realised that they were paying for something that they had been sold and could not use. Packaged accounts typically contain a bundle of products together with a current account, for which a customer pays a monthly fee – as high as £25 a month. Benefits frequently include annual travel insurance, mobile phone insurance and car breakdown cover. In many cases, however, customers have found that they are paying for travel insurance that does not cover them, either because they are too old or because they have pre-existing medical conditions which mean that they cannot claim......Read more here: Paid-for accounts threaten new bank scandal