The Financial Services Authority (FSA) is to take over the regulation of banks’ and building societies’ day-to-day contact with their customers as of Monday 2 November.
The FSA will cover everything from direct debits, payments, instant access and savings accounts, through to notifying customers when interest rates change.
Communications with customers by banks and building societies will have to be clear, fair and not misleading.
New regulatory framework
The FSA’s new regulatory framework will aim to give consumers better control of their finances. Banks and building societies will have to provide people with full information up front when they express interest in a financial product – not just a limited summary of how it will work.
Product providers will also be required to provide advance notice of changes to key terms and conditions. For current and instant access savings accounts, they will have to give customers at least two months’ prior notice of any disadvantageous interest rate changes (except if the account explicitly ‘tracks’ at a rate above the Bank of England base rate, or if the change is an explicit part of the contract).
Where a customer claims that an unauthorised transaction has taken place, the bank must refund the amount unless they can demonstrate that there is a good reason to investigate the consumer’s claim.
In addition, banks and building societies must start paying consumers interest on money put into their accounts from the moment that the funds are received. This will be extended to cover all accounts from 1 February 2010.
Britain Needs Better Banks
Dan Waters, the FSA’s director of conduct risk, said: ‘New regulations will put banking customers in the driving seat by setting down clear standards that people can expect from their institution. If firms fall short of these standards or fail to treat their customers fairly, the FSA will take action.’
Vera Cottrell, Which? principal policy adviser, said: ‘We welcome the positive changes the FSA is promising to deliver for consumers – but people will only benefit from them if the FSA uses its full range of powers to keep banks in check.
‘Instead of closing the stable door after the horse has bolted, the FSA must be proactive in finding and dealing with the problems consumers face with banks and building societies, or the new regulatory framework will not have the strong impact Which? believes it should.’
To join Which? in campaigning for better banks, log onto our special Britain Needs Better Banks website, www.bbnb.org and sign our online petition. Don’t forget you can ensure you get the best deal from your bank on current accounts and savings by regularly checking our Which? Best Buys and using our .
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