IT may sound perverse in the week that Bradford & Bingley became the third British bank to go cap in hand to shareholders with a rights issue, but the credit crunch might end up being great for bank managers.

It's given them the perfect opportunity to do something they've been trying for years without much success: cross selling their dodgier products.

Until the credit crunch hit last August, the market was so competitive than banks had to offer loss leaders - mortgages below the cost of wholesale funding, for example - to keep your business.

The crisis has changed all that. The mortgage market has shrunk by an astonishing three-quarters in the past year, according to Moneyfacts, with the number of home loans down from nearly 15,600 to just over 3,800. Things are nearly as bad with personal loans and credit cards.

That makes it much more difficult for consumers to take their business elsewhere if they don't like what their bank manager offers, especially if they have a less than perfect credit file. And once banks have you captive, you are a much more willing cross-selling victim.

The practice is nothing new: banks have always sold current accounts, upgraded you to packaged accounts, then pushed you into savings and other products by offering “preferential” rates.

Their cynicism is getting worse, though.

First we had eye-watering savings rates - but only if you put a certain amount of money into one of their investment schemes.

Halifax upped the stakes this month when it said that borrowers with a deposit of less than 10% would have to open its High Interest current account.Not such a hardship, you might think, given that the account pays 5.12% on credit balances of up to £2,500. However, that falls to 0.1% above the threshold and once it has got you through the door, Halifax has an uncanny ability to upgrade customers to its fee-paying account. Of the 1m HBOS customers who opened current accounts last year, 75% have the Ultimate Reward account, charging £120 a year.

Abbey took cross-selling to new lows last week when it extended its Super Monthly Saver account, which pays a eye-catching 10% a year. The rate is available only between £20 and £250, and the big catch is you have to take out a “qualifying” product. Last week it was its life and critical-illness cover. There are so many problems with this I don't know where to start.

Protection policies are an easy sell because bank managers can prey on your worst fears - who wouldn't be tempted to sign up to a critical-illness policy when told they have a one in three chance of dying of cancer and no-one to keep a roof over their children's heads if they fell sick.

The problem is that the terms and conditions are normally so tight that the protection often falls short when you need it most. To list just a few of the cases we've highlighted in the past few years: Helen Kasher, a mother of two from Leeds, developed breast cancer at 42 and assumed the critical-illness insurance she had been contributing to for four years would pay out when she had to give up work.

Her insurer, Norwich Union, refused on the grounds that she had failed to disclose two bouts of post-natal depression - clearly nothing to do with cancer.

Then there was Emma Joad, who died from human form of BSE at 30. However, her family couldn't get a life-insurance payout as she had failed to disclose a bout of dizziness, even though it may have been unrelated to the disease that killed her.

Admittedly insurers are cleaning up their act. The Association of British Insurers has a new code of conduct whereby claims should be paid in full if the non disclosure is innocent and in part if it is negligent. They should be refused only if the non-disclosure is deliberate.

The problem is that all too often what we consider innocent, the insurer considers negligent or even deliberate - these things are almost never stacked in the consumer's favour.

The tingling sensation that you went to the doctor about 10 years ago, and put down to having slept funnily, could take on unexpected significance in a multiple sclerosis claim further down the line.

When there are grey areas like these, the advice you get at the point of sale is paramount. I doubt Abbey sales staff will be going into the finer points of the small print when they've seen your eyes light up at the prospect of 10% on your savings. And given the shambles since its takeover by Spanish giant Santander, highlighted by Diana Wright in her Question of Money column, I don't have much faith in Abbey's ability to treat claimants thoroughly and promptly.

Then there's the fact that the policy is pretty expensive. A man aged 30 in good health would pay £13.28 a month for level life cover and £47.77 with critical illness added on. The cheapest providers on the market, Royal Liver and Axa, would charge £9.06 and £36.36 respectively, according to broker Lifesearch.

More importantly, the worst cases of mis-selling I've seen have involved protection, so forget your 10% and get some proper advice instead.

Kathryn Cooper is editor of the Money section

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