Currently, the Banking Code Standards Board monitors and enforces voluntary Banking Codes which govern banks’ day to day relationships with their customers.
From November, these arrangements will be replaced by new FSA rules which all banks, building societies and credit unions must follow.
Notable changes for consumers will include the requirement to provide a prompt and efficient service to help customers switch accounts.
This would apply more widely than the commitments in the banking codes, for example to cash ISAs, where the FSA has seen delays in the past. So when it comes to switching, customers will be able to have their transfer completed promptly – no matter what type of account.
Another key area is the provision of information. Currently, some informative material about a bank’s products and services must be communicated to people once they become customers.
The new FSA rules will require this information to be available at the point when people really need it – when they are making the decision whether or not to become a customer.
The FSA rules will help consumers to make informed and timely decisions, enabling them to both choose the best account for them, and know how to use their account most effectively.
The FSA will also ensure that the quality of customer service is maintained long after becoming a new customer. A new rule will mean service must remain prompt, efficient and fair for the duration of the relationship.
Firms will also need to comply with an explicit requirement to treat customers fairly, including when dealing with customers in financial difficulty and when processing payments.
The greater enforcement powers of the FSA, when compared with the BCSB, will also have a deterrent effect that was missing in the codes. The FSA can, and will where appropriate, fine firms if they fail to comply with the new rules to the detriment of their customers.
Jon Pain, retail managing director of the FSA, says:“These are important new standards that firms will need to meet. They will affect consumers’ everyday interaction with banks.
“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.”
The new banking rules will sit alongside those of the Payment Services Regulations.