Banks and building societies are hailing new changes to their codes of practice as a great step forward.
However, consumer groups say the new code does not go far enough.
Among the changes unveiled last Thursday are proposals offer more help for customers who may be heading towards financial difficulties, as well as greater clarity of information on products they sell.
The key proposals include:
- Pre-sale "summary boxes" for unsecured loans and savings accounts
- Prohibition of account closures solely because customers have made a valid complaint
- Strengthened credit assessment practices to enhance responsible lending
- More information on the forthcoming unclaimed assets dormant accounts schemes about to be introduced by the Government
- Greater certainty in cheque clearance, with customers knowing for the first time that six days after paying in a cheque the money is definitely theirs
- Greater transparency of information for credit cards and credit card cheques in terms of charges and how they are applied.
More details of the code and how it will work can be found by clicking here.
The complete independent review and the response of banks and building societies, can be found by clicking here.
The new code follows an independent review of the way banks and building societies operate by Mike Young, an independent consultant and former head of the small firms team at the Bank of England.
He says: "The review involved comprehensive consultation with key stakeholders and I am pleased that most of my recommendations have been accepted, in one form or another."
Angela Knight, chief executive of the British Bankers’ Association (BBA) says: "These revisions to the Code reflect the need to keep up with a changing world. It will continue to underpin the treatment and protection customers value and have every right to expect."
Adrian Coles, her opposite number at the Building Societies Association, adds: "The beauty of a voluntary Code, and the independent review that we have recently undertaken, is its flexibility - it can be updated to ensure consumers are protected quickly and effectively."
However, Financial Services Consumer Panel chairman John Howard, who advises the City’s main regulator, the FSA, on consumer issues, says: "There are still many areas where the code could go further – we note the independent reviewer has said his reforms have been accepted 'in one form or another', but we believe that some of those 'forms' are not sufficient.
"This is too crucial an area for consumers to rely on a voluntary banking code. The Consumer Panel believes, for instance, that if the FSA had already applied the principle of Treating Customers Fairly, the issue of unauthorised overdraft bank charges could well have been dealt with much earlier."
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