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New bank code comes into effect
The new Banking Code comes into force, requiring banks to do more to help customers with debt woes.
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Re: New bank code comes into effect
New bank code comes into effect
The Banking Code is a voluntary agreement
Banks must do more to help customers in financial difficulties, under the new Banking Code which has come into force.
The new voluntary code states that banks must contact customers they think may be heading toward debt problems.
The onus had been on people to contact their bank. The code, which applies to building societies, also contains a pledge to responsible lending.
Consumer group Which? said the new code should have gone further, such as raising minimum credit card repayments.
The long consultation process, now complete, has shown clearly what customers want and expect from their banks 
Angela Knight, chief executive of the British Bankers' Association
Banks must now assess whether people will be able to repay their debt, before they are given new loans or have their credit limits increased.
To do this they must look at customers' credit ratings, and take into account their income and other financial commitments.
"This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties," said Angela Knight, chief executive of the British Bankers' Association.
"The long consultation process, now complete, has shown clearly what customers want and expect from their banks.
"That has been the driver for these changes."
Better clarity
The new code also calls on banks to:
Provide customers with important information about unsecured loans and savings accounts in a standard summary box before they purchase a product
Give help to consumers switching their current account to another bank
Give customers greater clarity on the time it takes for cheques to clear
Offer customers the most up-to-date information on how to protect their accounts from fraud
Inform customers about the alternatives to chip-and-pin cards for people who are unable to use these because of a disability or medical condition Banks are also prevented from switching a customer from a free account to a fee-paying one without their permission.
The new code follows an independent review, which included consultation with the Treasury, Financial Services Authority, and Office of Fair Trading.
"A lot more could have been done to really benefit consumers," said Vera Cottrel, principal policy adviser at Which?#staysafestayhome
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