Banking Code must be more effectively enforced, says Which?

As the Independent Review of the Banking Codes is published, Doug Taylor, personal finance campaigner, Which?, comments:

“It is encouraging that subscribers to the Banking Code have agreed certain measures that will help to protect consumers.

“By including summary boxes on loan and credit card statements consumers will better understand the real cost of their borrowing. And after many customers’ current accounts were closed or threatened with closure when they complained about their bank charges, we are happy that banks will no longer be allowed to get away with this outrageous practice.

“We are concerned, however, that the Review’s proposals for changing the regulatory structure in the banking sector* should not result in any reduction in future consumer protection.

“Consumers should be able to rely on competent regulation and monitoring to sort out problems with the banking industry.  At a time when the industry is still suffering from a crisis of customer confidence, there needs to be more effective regulation and monitoring, not less.

-Ends-

Notes to Editor

*The Review proposes the drawing up of a ‘memoranda of understanding’ between the Financial Services Authority (FSA), Office of Fair Trading (OFT), Financial Ombudsman Service (FOS) and Banking Code Standards Board (BCSB) to clarify that the BCSB has primacy in monitoring compliance with the Code and the other regulators should not set up their own monitoring systems.  Which? views this as a potentially significant weakening of consumer protection.

There are a number of measures that Which? welcomes in the Review:

• the introduction of an overarching fairness obligation
• summary boxes on all savings and loans products and credit card statements
• adoption of all NI CC recommendations including pre-notification of overdraft charges
• more data sharing
• subscribers will no longer close accounts or threaten to do so following complaints
• better high-lighting of the option to pay by direct debit for credit card balances
• a greater commitment to help those in financial difficulties
• improved measures for lenders to check affordability

There are also a number of measures that Which? is dissatisfied with.  The following are measures that the subscribers to the Banking Code have rejected or watered down:

• Rejected: the notification of the end of temporary bonus rates which were offered for more than three months
• Rejected: increased levels of minimum repayments on credit cards.
• Rejected: the use of inquiry searches for risk-based priced products.