New Banking Code launched

The new Banking Code and Business Banking Code contain an enhanced promise by banks and building societies to treat customers fairly and reasonably.

That promise is supported by eight key commitments and the standards of the revised Code. The new Codes take effect today following an independent review. 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.

As well as the enhanced promise of fairness, further key improvements to the Banking Code include:

a new commitment on responsible lending;
more help for customers who may be heading towards financial difficulties;
strengthened credit assessment practices to enhance responsible lending;
clearer information about products, including pre-sale summary boxes for unsecured loans and savings accounts;
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.

Angela Knight, Chief Execuitve of the British Bankers' Association, said: "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."

Adrian Coles, Director General of the Building Societies Association, said: "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."

Paul Smee, Chief Executive of APACS, the UK Payments Agency, said: "The new Banking Code benefits consumers by bringing in practical enhancements to the service they already receive from their bank or building society. This can be seen in the greater clarity of cheque clearing to the additional transparency of information relating to credit cards and credit card cheques."

Robert Skinner, Chief Executive of the Banking Code Standards Board, said: " We welcome the improvements in the Code. We look forward to working with the industry and other regulators to ensure equivalent standards of fairness for all banking products."

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. We 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 our public response to the review in November 2007.

The FSA is reviewing whether, in areas falling within its remit, the current arrangements for regulating retail banking remain appropriate. This runs alongside the Office of Fair Trading market study into competition for personal current accounts and HM Treasury's consultation on banking regulation generally. We will engage with these reviews to further explore application of the Treating Customers Fairly principle for retail banking.