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The British Bankers Association (BBA), Building Societies Association (BSA) and APACS are set to launch the new Banking and Business Banking Codes 2008 at the end of the month. The codes were subject to independent review in November last year and although there were no significant gaps found in the existing codes, around 50 amendments were deemed necessary. The following areas are a summary of the most important changes.
The codes will provide more assistance to customers who are clearly heading towards more financial difficulties.
Product information will need to be presented more clearly, especially on unsecured loans and savings products which will now carry special summary information boxes on their advertising and literature.
Organisations will now be prevented from closing customer accounts simply because that customer has lodged a complaint.
The move to more responsible lending will be enforced by the use of stronger credit checking processes. Observers have noticed a relaxing of resilient credit assessment procedures, with organisations increasing the price of products to offset the higher levels of defaults caused by the more lax assessment techniques.
Clearer information will be provided to customers about credit cards and credit card cheques, which more recently have been seen to include complicated terms and conditions which were not easily understood by customers.
Unclaimed assets have become an issue recently with organisatons attempting to reduce costs by automatically closing dormant accounts. The workings of these schemes will need to be more transparently described and better information made available.
The world of finance and banking is regulated by a whole mix of independent and trade run bodies. The Government sponsored FSA and OFT are the most well-known independent organisations, while both the British Bankers Association and the Association of Finance Brokers are both trade bodies.
FISA, the Finance Industry Standards Association is another group concerned with the self-regulation of the lending market, while the Council of Mortgage Lenders is more concerned with the promotion, rather than the regulation of the mortgage industry.
It has been widely reported that terms and conditions on financial products have been getting over complicated recently, to the extent that most customers don't even bother reading them, knowing that even if they did, they would be unlikely to understand what they meant. That meant that financial organisations could include all kinds of conditions to protect themselves knowing that they would be unlikely to affect potential customers accepting their products. The new banking codes aim to make companies simplify these terms so that customers can more easily understand what they are signing up for and to provide fairer terms that also work in the favour of customers when required.
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