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From today's Times
http://www.timesonline.co.uk/tol/mon...cle6868224.ece
November should mark a brighter dawn for all of us with a bank account. That it will probably do little to curb the banks’ bad behaviour will be yet another black mark on the stained copybook of the Financial Services Authority (FSA).
The first of the month is when the chief City watchdog will take over the policing of retail banking. The Banking Code, the cosy system of self-regulation that has allowed poor service and bad practice to flourish, will be consigned to the dustbin.
Few will mourn its passing, as tighter regulation is long overdue. But what is the point of replacing a broken system with a replacement that looks fundamentally flawed?
When the FSA announced that it was taking over banking regulation, it promised greater transparency for consumers. A noble goal, but one that, on November 1, it will singularly fail to achieve. There are few things to commend the Banking Code but, in its favour, it is clear and easy to understand. At 37 pages of large print, you can just about absorb it in a single sitting.
Under the new regime, the code will be replaced with three separate directives. I can’t be the only one to think that one into three sounds like a recipe for befuddlement. The FSA will oversee two of the strands — the Banking: Conduct of Business Sourcebook and the Payment Services Directive.
These broadly cover how banks deal with customers with cash deposits. Overdrafts, loans and credit cards will continue to be policed by the Banking Code Standards Board in its new guise of the Lending Standards Board.
If you are keen to acquaint yourself with the rules, prepare for more than 100 pages of the finest legalese. The FSA has promised to publish reader-friendly guides before the November deadline, but this week was unable to confirm when.
Why do we need three sets of rules in any case? This cobbled-together compromise results from a decades-old division between the regulation of banking and credit that should have been binned long ago.
It is a shame, because the new rules contain some good ideas. In fraud cases banks will have to prove that the customer was at fault. Currently the onus is on customers to prove that they did nothing wrong. Another positive move will require banks to give most customers two months’ notice of any interest rate changes.
The FSA will also be able to fine banks and building societies that fail to treat customers fairly — although that has not proved a deterrent to bad behaviour in the past. It may stop the big institutional abuses, but many more cases will continue to slip through the net.
All in all, this looks like a missed opportunity to swing regulation decisively in the customer’s favour
http://www.timesonline.co.uk/tol/mon...cle6868224.ece
November should mark a brighter dawn for all of us with a bank account. That it will probably do little to curb the banks’ bad behaviour will be yet another black mark on the stained copybook of the Financial Services Authority (FSA).
The first of the month is when the chief City watchdog will take over the policing of retail banking. The Banking Code, the cosy system of self-regulation that has allowed poor service and bad practice to flourish, will be consigned to the dustbin.
Few will mourn its passing, as tighter regulation is long overdue. But what is the point of replacing a broken system with a replacement that looks fundamentally flawed?
When the FSA announced that it was taking over banking regulation, it promised greater transparency for consumers. A noble goal, but one that, on November 1, it will singularly fail to achieve. There are few things to commend the Banking Code but, in its favour, it is clear and easy to understand. At 37 pages of large print, you can just about absorb it in a single sitting.
Under the new regime, the code will be replaced with three separate directives. I can’t be the only one to think that one into three sounds like a recipe for befuddlement. The FSA will oversee two of the strands — the Banking: Conduct of Business Sourcebook and the Payment Services Directive.
These broadly cover how banks deal with customers with cash deposits. Overdrafts, loans and credit cards will continue to be policed by the Banking Code Standards Board in its new guise of the Lending Standards Board.
If you are keen to acquaint yourself with the rules, prepare for more than 100 pages of the finest legalese. The FSA has promised to publish reader-friendly guides before the November deadline, but this week was unable to confirm when.
Why do we need three sets of rules in any case? This cobbled-together compromise results from a decades-old division between the regulation of banking and credit that should have been binned long ago.
It is a shame, because the new rules contain some good ideas. In fraud cases banks will have to prove that the customer was at fault. Currently the onus is on customers to prove that they did nothing wrong. Another positive move will require banks to give most customers two months’ notice of any interest rate changes.
The FSA will also be able to fine banks and building societies that fail to treat customers fairly — although that has not proved a deterrent to bad behaviour in the past. It may stop the big institutional abuses, but many more cases will continue to slip through the net.
All in all, this looks like a missed opportunity to swing regulation decisively in the customer’s favour
