First Direct is scrapping its 'First Directory' add-on, pulling out of bundled insurance distribution after more than two decades of offering travel, mobile and breakdown cover through its current account.
The product closes for good on July 31, 2026, ending an arrangement that has, in its final years, run through Aviva and RAC.
First Directory charges current account holders £15 a month for worldwide travel insurance, mobile phone insurance and motor breakdown cover, bundled together as an add-on to a standard First Direct account.
The bank stopped selling it to new customers in 2020 but kept it running for existing holders until now. First Direct told MoneySavingExpert.com the closure follows "a recent review," without elaborating further on its reasoning.
The decision means First Direct, a division of HSBC UK Bank plc, is exiting the insurance-bundling model altogether rather than switching to a new underwriter or relaunching under different terms, a more decisive move than the periodic insurer reshuffles seen elsewhere in the packaged account market.
Cover continues as normal until July 31, with a final monthly fee taken in August as it is charged in arrears.
After that, customers get free transitional cover until October 31, though with notable exceptions -- newly booked trips and mobile phones bought on or after August 1 will not be covered under the wind-down arrangement. Cover can also end earlier for customers who turn 70, since First Directory carries a maximum policyholder age of 69.
The rest of the First Direct current account, including overdrafts and linked savings, is unaffected.
The travel and mobile phone elements of First Directory are underwritten by Aviva Insurance Limited, while the motor breakdown element is administered by Aviva and provided by RAC Motoring Services and RAC Insurance Limited.
First Direct's exit removes a long-standing affinity distribution channel for both insurers, though not necessarily lost business altogether. Aviva also underwrites the worldwide family travel insurance on Nationwide's FlexPlus account, one of the alternatives being pointed to by consumer sites, so some of the churn may simply move between products Aviva already underwrites.
The wider packaged account market that First Direct is stepping away from remains active elsewhere. Santander's Edge Explorer, Nationwide's FlexPlus, the Co-operative Bank's Everyday Extra, Lloyds' Club Lloyds accounts, Virgin Money's Club M and Monzo's Max all continue to bundle travel, mobile and breakdown cover behind a monthly fee, underwritten variously by Aviva, AIG, Zurich, Allianz Assistance, Assurant and Green Flag, among others.
First Direct's withdrawal reduces the number of banks competing in the segment rather than signalling a wholesale retreat from it.
Packaged bank accounts carry a difficult history for the industry. They were a significant source of mis-selling complaints during the 2010s, with the Financial Ombudsman Service still handling cases where customers say they were not given a genuine choice between a fee-free account and a packaged one, or were sold cover they were not eligible to use.
The FCA's rules under the Insurance Conduct of Business Sourcebook specifically require providers to check customers' eligibility for insurance bundled into these accounts.
That history is relevant to how First Direct's closure will be judged. Under the Consumer Duty, firms discontinuing a retail financial product are expected to communicate the change clearly, avoid leaving customers unexpectedly uninsured, and ensure any transitional arrangement represents fair value.
First Direct's decision to extend cover for free for three months, rather than simply letting it lapse, fits that expectation, though the exclusions on new trips and newly bought phones during the transition period will need to be clearly flagged to avoid complaints from customers who assume they remain fully covered.
First Direct's exit looks more like portfolio rationalisation at one bank than the start of a broader pullback from insurance-linked current accounts.
Even so, it leaves Aviva and RAC managing the runoff of a legacy book, and gives competing packaged accounts, and the insurers behind them, a pool of switching customers to compete for over the coming months.
