Credit card holders lose benefits

Barclaycard is one of a number of providers slashing benefits

Millions of people with the UK's most widely-held credit card are losing some of their free perks in the New Year as strict new insurance regulations come into force.

Barclaycard, which has 10.8 million customers, is withdrawing its free accident insurance, extended warranty insurance, and a price-matching promise.

From 14 January 2005, insurance sales will be regulated by the Financial Services Authority which means more time and paperwork for the banks, forcing many to review their offers.

Barclaycard is not alone in its benefits cull. Lloyds TSB, Halifax and Sainsbury's Bank have all made similar decisions.

Lloyds has already withdrawn free insurance benefits for new gold and platinum card customers, and is reviewing the position for existing cardholders.

Halifax is ditching its travel and purchase protection insurance all new credit cards, and may also do the same for current customers.

And Sainsbury's Bank is withdrawing travel accident insurance and purchase protection cover from all its cards from 1 March, 2005.

Future bundle

Speaking to BBC Radio 4's Money Box programme, Ian Barber of Barclaycard confirmed the new regulations had prompted a review, and said:

"That has forced us to have a real close look at these for the first time in a while, and when we did that, what we found is that they are popular, but with a fairly small number of customers."

What we are actually looking to do is to make sure that customers understand that they are protected against fraud Ian Barber, Barclaycard

Mr Barber recognised that "not everyone is going to be terribly happy" with the decision, and said the bank will eventually offer the previously free benefits as a bundle people can pay for.

And he continued: "The aim is to make sure that the cover we give people is the best cover in the market and that the price we charge people is the lowest price."

In place of the old benefits Mr Barber explained a range of new ones: "things like identity protection service, fraud protection, purchase delivery protection and a travel service".

However, Barclaycard already protects customers against fraud.

When this was put to Mr Barber, he responded by saying: "Well, there is a difference between that being in place anyway, and customers knowing about it.

"What we are actually looking to do is to make sure that customers understand that they are protected against fraud.

"A big part of the card is fraud protection, and many of our competitors also talk about the fraud protection on their cards."

BBC Radio 4's Money Box was broadcast on Saturday, 18 December, 2004, 2004, at 1204 GMT.

The programme was repeated on Sunday, 19 December, 2004, at 2102 GMT.