The new banking code has come into effect today which contains promises by banks and building societies to treat customers fairly and reasonably.
Changes to the codes were made after consultation with consumer groups, HM Treasury, the Financial Services Authority, the Office of Fair Trading and other interested parties.
The banking code includes a commitment on responsible lending; more help for customers who may be heading towards financial difficulties; strengthened credit assessment practices to enhance responsible lending and clearer information about products, including pre-sale summary boxes for unsecured loans and savings accounts.
It also includes the prohibition of account closure as a result of a customer making a valid complaint; information on how to find your lost account (dormant account); greater clarity of cheque clearance times; and clearer information about credit cards and credit card cheques.
British Bankers’ Association chief executive Angela Knight says: “This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties. The long consultation process, now complete, has shown clearly what customers want and expect from their banks. That has been the driver for these changes.”
Building Societies Association director general Adrian Coles adds: “The FSA is reviewing the longer term interaction between itself and the Banking Codes. This runs alongside the Office of Fair Trading study of the retail banking market and HM Treasury’s consultation on banking regulation generally. We will work closely with the OFT, FSA and the Treasury on these reviews, including bringing about an over-arching application of appropriate fairness principles to all aspects of retail banking as soon as possible.”
There will be further discussions with the BCSB, sponsors, subscribers and consumer experts on how the Banking Codes will look in the future. The aim is to bring the Codes more in line with the FSA’s principles-based regulatory approach.
The BBA says it will also be asking if the Code should include a section devoted to helping customers help themselves, drawing together issues such as guarding PIN numbers and understanding interest rates. This was proposed in its public response to the review in November 2007.