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New bank code comes into effect New bank code comes into effect
(about 3 hours later)
Banks must do more to help customers in financial difficulties, under the new Banking Code which has come into force.Banks must do more to help customers in financial difficulties, under the new Banking Code which has come into force.
The new voluntary code states that banks must contact customers they think may be heading toward debt problems.The new voluntary code states that banks must contact customers they think may be heading toward debt problems.
The onus had been on people to contact their bank. The code, which applies to building societies, also contains a pledge to responsible lending.The onus had been on people to contact their bank. The code, which applies to building societies, also contains a pledge to responsible lending.
Consumer group Which? said the new code should have gone further, such as raising minimum credit card repayments.Consumer group Which? said the new code should have gone further, such as raising minimum credit card repayments.
The long consultation process, now complete, has shown clearly what customers want and expect from their banks Angela Knight, chief executive of the British Bankers' AssociationThe long consultation process, now complete, has shown clearly what customers want and expect from their banks Angela Knight, chief executive of the British Bankers' Association
Banks must now assess whether people will be able to repay their debt, before they are given new loans or have their credit limits increased.Banks must now assess whether people will be able to repay their debt, before they are given new loans or have their credit limits increased.
To do this they must look at customers' credit ratings, and take into account their income and other financial commitments.To do this they must look at customers' credit ratings, and take into account their income and other financial commitments.
"This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties," said Angela Knight, chief executive of the British Bankers' Association."This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties," said Angela Knight, chief executive of the British Bankers' Association.
"The long consultation process, now complete, has shown clearly what customers want and expect from their banks."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.""That has been the driver for these changes."
Better clarityBetter clarity
The new code also calls on banks to:The new code also calls on banks to:
  • Provide customers with important information about unsecured loans and savings accounts in a standard summary box before they purchase a product
  • Provide customers with important information about unsecured loans and savings accounts in a standard summary box before they purchase a product
  • Give help to consumers switching their current account to another bank
  • Give help to consumers switching their current account to another bank
  • Give customers greater clarity on the time it takes for cheques to clear
  • Give customers greater clarity on the time it takes for cheques to clear
  • Offer customers the most up-to-date information on how to protect their accounts from fraud
  • Offer customers the most up-to-date information on how to protect their accounts from fraud
  • Inform customers about the alternatives to chip-and-pin cards for people who are unable to use these because of a disability or medical condition
  • Inform customers about the alternatives to chip-and-pin cards for people who are unable to use these because of a disability or medical condition
    Banks are also prevented from switching a customer from a free account to a fee-paying one without their permission.Banks are also prevented from switching a customer from a free account to a fee-paying one without their permission.
    The new code follows an independent review, which included consultation with the Treasury, Financial Services Authority, and Office of Fair Trading.The new code follows an independent review, which included consultation with the Treasury, Financial Services Authority, and Office of Fair Trading.
    "A lot more could have been done to really benefit consumers," said Vera Cottrel, principal policy adviser at Which?"A lot more could have been done to really benefit consumers," said Vera Cottrel, principal policy adviser at Which?

    Are you in debt? Do you think banks should do more to help customers who are heading towards financial difficulties? You can send us your comments using the form below:
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