The new Banking Code and Business Banking Code, which come into force today, will put pressure on banks and building societies to make a strong commitment to responsible lending.
The new code has been created as part of an independent review, following consultation with consumer groups, the FSA, Office of Fair Trading and HM Treasury, and promises to treat customers fairly and reasonably.
Improvements to the Banking Code include new commitments on responsible lending, as well as more help for customers experiencing financial difficulties, according to the British Bankers’ Association (BBA).
To help lenders make responsible decisions, strengthened credit assessment practices will be put in place and consumers will be given clearer information about products, including pre-sale summary boxes for unsecured loans and savings accounts.
In addition, banks and building societies will be prohibited from closing accounts because of customers making a valid complaint, while credit cards and credit card cheques will carry clearer information for consumers.
Angela Knight, chief executive of the BBA, comments: "This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties. The long consultation process, now complete, has shown clearly what customers want and expect from their banks.”
The BBA says the new codes are designed to be more in line with the FSA’s principles-based approach to regulation and says discussions on the future of the code will continue with all parties involved.
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