BCOBS - comes into force 1/11/09

[Amethyst]

Reponse due Q2 2009








FSA consults on regulating retail banking conduct of business



FSA/PN/126/2008
04 November 2008
The Financial Services Authority (FSA) has today published a consultation paper proposing a new framework to regulate the way that banks treat their customers.
Currently, the Banking Code Standards Board monitors and enforces the voluntary Banking Codes governing current accounts, personal loans and overdrafts, savings, card services and ATMs.
Next year the FSA will become responsible for regulating banks and building societies payment transactions under the Payment Services Directive (PSD). The review published today considers whether it would be more effective to extend the FSA’s regulation across all aspects of banks' relationships with their retail customers. This would exclude credit, such as unsecured loans and credit cards, which is regulated by the Office of Fair Trading.
Jon Pain, FSA managing director of retail markets, said:
“Retail banking is going through a period of rapid change and regulation needs to keep pace with this change. We believe that in order to ensure that the regulatory model is fit to meet these challenges, now and in the future, the FSA should regulate the wider aspects of everyday banking for all consumers.
“We are working closely with the Banking Code Sponsors, Banking Code Standards Board, the Office of Fair Trading and consumer bodies to ensure we have input from all of the groups interested in this field.”
The FSA is proposing the following new framework:

• full application of the FSA’s Principles for Businesses to the regulated activities of accepting deposits and issuing electronic-money;
• new high-level rules applying to retail banking services outside PSD scope in a Banking Conduct of Business sourcebook (BCOBS);
• transfer of existing COB rules and guidance applying to deposit taking to BCOBS;
• monitoring and enforcement by the FSA, integrated into the wider risk-based approach to the supervision of the relevant firms and groups.

The FSA is inviting responses by 16 February 2009.
Notes for editors

1. See CP 08/19: Regulating retail banking conduct of business.
2. The Payment Services Directive will come into force in November 2009, and will introduce its own conduct of business rules affecting the majority of retail bank accounts.
3. Any changes made within banking conduct of business would apply only to retail deposit taking – as opposed to the OFT scope such as consumer credit (including credit cards)
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

[the banking code is..]widely supported by subscribers and consumer groups because it provides customers with an easy
to digest reference to the practices they can expect from their bank. However, we agree that it would
be anomalous for retail banking to remain outside statutory regulation following implementation of
the PSD and appointment of the FSA as the competent authority.
We do not agree with FSA’s market failure analysis in Annex 2, particularly its assertion that
information asymmetry exists between providers and consumers. We believe that customers are
provided with clear, comprehensive and timely information on all aspects of banks’ products and
services.

http://www.bba.org.uk/content/1/c6/0...A_BCOBS_CP.pdf


about this - http://www.fsa.gov.uk/pubs/cp/cp08_19.pdf

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

BBA 24/4

· Banking Regulation
On 24 April 2009, the Financial Services Authority announced that it will take over all retail
banking conduct regulation for deposit taking and payment services in November 2009. Currently,
the Banking Code Standards Board (BCSB) 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. When it comes to switching, customers will be able to have their transfer
completed promptly.
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.
Areas of retail banking which fall outside the FSA’s remit, such as overdrafts and credit card
lending, will continue to be regulated under the Consumer Credit Act.
Further information can be obtained at the link below:
http://www.fsa.gov.uk/pubs/policy/ps09_06.pdf

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

[quot=bba feb 2009]BBA believes that for the benefit of consumers and our members the Banking Code’s credit provisions should be included as an unconfirmed chapter of Industry Guidance under BCOBs. FSA would not monitor or enforce this chapter, but industry would work with key stakeholders to agree an appropriate self-regulatory regime with effective representative governance.[/quote]

FSA proposes to include the treatment of customers in financial difficulties in the high level BCOBs rules. As financial difficulty is experienced through use of credit i.e. the creation of debt, this reinforces our belief that conduct of business provisions for credit should be included in Industry Guidance.

Under the Consumer Credit Act the OFT is responsible for having regard to cases of irresponsible lending when monitoring the credit licence regime. This responsibility includes the way in which lenders deal with defaults and arrears. There is therefore the potential for duplication to exist between the approaches of FSA and OFT to financial difficulties. BBA believes a concordat or MoU should be developed to mitigate this potential for duplicate regulation.

4.2.1R (2) – We require clarification of the meaning of the term ‘duplicate copy’. In some circumstances it would not be possible to produce an exact copy of a previous statement, for instance where a system has been changed. Also, our members normally only retain the data required for past statements for a period of 6 years, as per the Statute of Limitations. We therefore request that guidance is added to include a 6 year cut off for past requests.

http://www.bsa.org.uk/docs/BBA_BCOB_Annex.pdf

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

TO READ YOU MUST SET THE DATE AT THE TOP TO 1/11/2009 Full Handbook / BCOBS Banking: Conduct of Business sourcebook (BCOBS)

Reference codeTitle BCOBS 1 Application
BCOBS 2 Communications with banking customers and financial promotions
BCOBS 3 Distance communications
BCOBS 4 Information to be communicated to banking customers
BCOBS 5 Post sale
BCOBS 6 Cancellation
BCOBS transchedule Transitional Provisions and Schedules


BCOBS 1.1: [Not yet in force] General application
BCOBS 2.1: [Not yet in force] Purpose and Application: Who and what?
BCOBS 2.2: [Not yet in force] The fair, clear and not misleading rule
BCOBS 2.3: [Not yet in force] Other general requirements for communications and financial promotions
BCOBS 2.4: [Not yet in force] Structured deposits, cash deposit ISAs and cash deposit CTFs
BCOBS 3.1: [Not yet in force] Distance marketing
BCOBS 3.2: [Not yet in force] E Commerce
BCOBS 3 Annex 1: [Not yet in force] Distance marketing information
BCOBS 3 Annex 2 : [Not yet in force] Abbreviated distance marketing information
BCOBS 4.1: [Not yet in force] Enabling banking customers to make informed decisions
BCOBS 4.2: [Not yet in force] Statements of account
BCOBS 5.1: [Not yet in force] Post sale requirements
BCOBS 6.1: [Not yet in force] The right to cancel
BCOBS 6.2: [Not yet in force] Exercising the right to cancel
BCOBS 6.3: [Not yet in force] Effects of cancellation
BCOBS 6.4: [Not yet in force] Obligations on cancellation
BCOBS 6.5: [Not yet in force] Other applicable legislation
BCOBS Sch 1: [Not yet in force] Record-keeping requirements
BCOBS Sch 2: [Not yet in force] Notification requirements
BCOBS Sch 3: [Not yet in force] Fees and other required payments
BCOBS Sch 4: [Not yet in force] Powers exercised
BCOBS Sch 5: [Not yet in force] Rights of action for damages
BCOBS Sch 6: [Not yet in force] Rules that can be waived




Example

BCOBS 4.2 Statements of account


BCOBS 4.2.1 01/11/2009 (1) A firm must provide or make available to a banking customer on paper or in another durable medium such regular statements of account as are appropriate to the type of retail banking service provided, but need not do so where:
(a) the firm has provided a banking customer with a pass book or other document in a durable medium that records transactions in relation to the retail banking service;
(b) the retail banking service is provided at a distance by means of electronic equipment where the banking customer can access his account balance, view transactions and give instructions in relation to the retail banking service at a distance by such means;
(c) a banking customer has elected not to receive periodic statements of account, and for so long as such election is in force; or
(d) it has reasonable grounds to believe that the banking customer is not resident at the address last known to it as the address of the banking customer and it is not practicable after reasonable inquiry to ascertain the banking customer's address.
(2) A firm must not charge for providing information which is required to be provided by (1).
(3) A firm must provide a banking customer with a true copy of any statement of account provided to him under (1) on paper or in another durable medium within a reasonable period of time following a request to that effect made by or on his behalf.
(4) A firm and a banking customer may agree on a charge for:
(a) providing a copy of a statement of account under (3); or
(b) providing statements of account more frequently than required by (1);
at the request of the banking customer. Any such charge must reasonably correspond to the firm's actual costs.

[EXC]

Re: Regulating retail banking code of conduct due Q2 2009

Interesting.

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

GUIDANCE ONLY

Dealings with customers in financial difficulty

BCOBS 5.1.4 01/11/2009 Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

Principle 6 - Customers' interests A firm must pay due regard to the interests of its customers and treat them fairly.

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

Anyone understand correctly the difference between RULES and GUIDANCE within BCOBS.

The TCF / Financial Hardship elements are all Guidance.

[Amethyst]

Re: Regulating retail banking code of conduct due Q2 2009

CEO letter regarding transition to bcobs http://www.fsa.gov.uk/pubs/other/bcr_co_letter.pdf

and fabbo video training on bcobs - Banking Conduct of Business (actually worth a watch if you want to get your head round the changes, some strange pictures of piles of dollars tho which sems a bit bizarre - nice quiz at the end tho - You scored 6 out of 6. That's 100% )

All sits perfectly with the PCA remedies. BCOBS 4 and 5 are ''NEW'' and covers basically transparency and switching.


BCOBS

BCOBS 1Application (Comes into force on 01/11/2009)
BCOBS 2Communications with banking customers and financial promotions (Comes into force on 01/11/2009)
BCOBS 3Distance communications (Comes into force on 01/11/2009)
BCOBS 4Information to be communicated to banking customers (Comes into force on 01/11/2009)
BCOBS 5Post sale (Comes into force on 01/11/2009)
BCOBS 6Cancellation (Comes into force on 01/11/2009)
BCOBS transcheduleTransitional Provisions and Schedules (Comes into force on 01/11/2009)

[Amethyst]

Re: BCOBS - comes into force 1/11/09

Same time as this transition occurs the Banking Code Standards board is switching over to become the Lending Standards Board - covering the credit products offered by banks, building societies and credit card providers.

This covers irresponsible lending, consumer responsibility and consumer credit legislations.

[EXC]

Re: BCOBS - comes into force 1/11/09

Good stuff Ame.

The Times are less than impressed though http://www.timesonline.co.uk/tol/mon...cle6868224.ece

[Amethyst]

Re: BCOBS - comes into force 1/11/09

New leaflets are being produced to take over banking code leaflets....so getting out hands on those is a good idea. they seem to all be held up as some final changes are due to happen 'mid october' but I can't see that they have yet and wondering if they too rely on the conclusion of the supreme court ?

I want to put together a decent guide because there are some good changes to regs but wonder if we may as well just wait till the change over actually happens ?




( The November 2009 Banking and Payment Services regime | The In-House Lawyer Raymond Cox QC's view on bcobs )

On November 4th 2008, FSA announced new proposals for the extension of its regulation of retail banking. This will bring to an end one of the last areas of self-regulation in retail financial services, the Banking Code regime operated by the Banking Code Standards Board (BCSB). These reforms go hand in hand with FSA assuming new responsibilities for payment services on implementation of the Payment Services Directive (PSD) in November 2009

[Tools]

Re: BCOBS - comes into force 1/11/09

I want to put together a decent guide because there are some good changes to regs but wonder if we may as well just wait till the change over actually happens ?

Until the Judgment and until the banks have finished fannying about with their charging structures/costs I think it would be wise to wait.

[Amethyst]

Re: BCOBS - comes into force 1/11/09

FSA to begin new banking regulation - NewsNow: Loading story...

28 October, 2009
The Financial Services Authority (FSA) will begin regulating banks' and building societies' day-to-day contact with their customers from 1 November 2009, covering everything from direct debits, payments, instant access and savings accounts through to unauthorised transactions and notification of interest rate changes.

This new framework will deliver wide-ranging benefits for consumers, including:
Getting information up front
Banks will have to provide prospective customers with full information on the service or product that interests them. Previously customers only received limited information up front, with the remainder following once they had signed up to the service or product. The change in approach will let consumers make more informed decisions.
Advance notification of changes
Banks and building societies must provide advance notice of changes to key terms and conditions. For current and instant access 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' a reference rate; e.g. 2% above the Bank of England Base Rate or the change is an explicit part of the contract).
Unauthorised transactions
Where a customer claims that an unauthorised transaction has taken place, the bank must refund the amount unless they can show some good reason why they need to investigate the claim.
Giving value when money is received
For current and instant access accounts, consumers will now begin receiving interest on money transferred into their account from the moment that the bank receives the funds. This is referred to as giving value, and will be extended to all accounts from 1 February 2010.
Unexpected sums

If a debit is made from a customer's credit or debit card, or indeed a direct debit, and it is more than they could reasonably have expected, the entire amount must be refunded by the bank unless they can provide evidence to justify refusing the refund. They must do so within 10 days.
Commenting on these reforms, Dan Waters, the FSA's director of conduct risk, said:
"From the 1 November there will be specific standards covering many aspects of everyday banking transactions that have been major concerns for customers.
"New regulations will put banking customers in the driving seat by setting down clear standards that people can expect from their institution, like speeding up payments between accounts, adequate notice of changes in terms and conditions, and smoothing the procedure for querying an unauthorised or unexpected transaction.
"If firms fall short of these standards or fail to treat their customers fairly, the FSA will take action."
From 1 November 2009 the FSA will also regulate money remitters - firms that transmit money across the world. For the first time their customers will have the protection of the Financial Ombudsman Service.
Other benefits for customers of money remitters:
Remitters will have to provide more information to customers before they commit to using their services - for example how long the transfer will take, how much it will cost, details of any applicable exchange rate and if they are FSA regulated.
Where transfers are made within the European Economic Area, firms will have to clear payments more quickly - once remitters have received money from the customer they will need to ensure the payee receives it the following business day (although until January 2012 as long as the customer agrees this can be extended to the third business day).
Areas of retail banking which fall outside the FSA's remit, such as overdrafts and credit card lending, will continue to be regulated by the Office of Fair Trading under the Consumer Credit Act

[Amethyst]

Re: BCOBS - comes into force 1/11/09

the new leaflets were made public yesterday...

http://www.moneymadeclear.fsa.gov.uk...nk_account.pdf


Slightly odd inclusion of this in the common Q&A's

I’m in financial difficulties
and can’t pay my overdraft
charges as well as my other
debts – what can I do?
Answer
Talk to your bank or building society as
soon as possible to let them know the
situation – they may be able to help.
You can also get help from various
money and debt advice agencies –
see Useful contacts.

and

Unauthorised overdraft – if you
accidentally or deliberately spend
beyond your authorised overdraft
limit, your bank or building society
will probably charge you extra. These
charges usually come in two forms:
• a flat fee for every transaction you
have made over your agreed limit; and
• a higher interest rate on the money
you have borrowed above the limit.
You may also be charged daily or
monthly fees. These charges can
cost you a lot of money over time.
You should try to avoid going into
unauthorised overdraft. If you see
that you are getting close to the limit
you have been given, try to reduce
your spending or talk to your bank or
building society about your situation.
In July 2007 the Office of Fair Trading
(OFT), seven UK banks and one
building society began a test case
about unauthorised overdraft charges
for personal current accounts. The
FSA is not party to the test case, but
we have an interest in it, and give
support where needed. You can find
up-to-date information about this
test case and what it means for you
on our and the OFT’s websites

New credit card guide - http://www.moneymadeclear.fsa.gov.uk...edit_cards.pdf