FSA moves in on voluntary banking code

by Gill Montia

Story link: FSA moves in on voluntary banking code

The Financial Services Authority (FSA) has announced that from November, it will be taking over the rules of conduct for the deposit taking and payment services activities of all retail banks and credit unions.

Banks’ day-to-day conduct with their customers is currently the remit of the Banking Code Standards Board (BCSB), which monitors and enforces voluntary banking codes.

The FSA points out that unlike the BCSB, it can (and will) fine firms that fail to comply with its rules “to the detriment of their customers”.

Under the new arrangements, consumers should benefit from faster transfers into cash ISAs with “a prompt and efficient service” that will also help customers switch accounts.

The code will also address the availability of information about banks’ services, ensuring that consumers have copies of this when deciding whether or not to open an account, rather than after the event.

In addition, service will have to remain “prompt, efficient and fair for the duration of the relationship”.

The regulations also contain “an explicit requirement to treat customers fairly, including when dealing with customers in financial difficulty and when processing payments”.

Commenting on the changes, Jon Pain, FSA retail managing director says: “These are important new standards that firms will need to meet. They will affect consumers’ everyday interaction with banks.”

He adds “Before the new rules come into force, the FSA will publish comprehensive information for consumers detailing their rights and outlining what they can expect from their banking provider.”

Finally, it should be noted that areas of retail banking which fall outside the FSA’s remit, such as overdrafts and credit card lending, will continue to be regulated under the Consumer Credit Act.