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New banking regulation promotes fairness for consumers
FSA/PN/053/2009
24 April 2009
The Financial Services Authority (FSA) 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. 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.
Commenting on the changes, Jon Pain, FSA retail managing director said:
"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. This European legislation is designed to harmonise the standards of customer service for all payment transactions throughout the European Union. It contains a number of important consumer protection measures including confirming a customer’s right to a refund for unauthorised transactions and requiring a minimum speed for transfers.
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.
Notes for editors
New banking regulation promotes fairness for consumers
FSA/PN/053/2009
24 April 2009
The Financial Services Authority (FSA) 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. 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.
Commenting on the changes, Jon Pain, FSA retail managing director said:
"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. This European legislation is designed to harmonise the standards of customer service for all payment transactions throughout the European Union. It contains a number of important consumer protection measures including confirming a customer’s right to a refund for unauthorised transactions and requiring a minimum speed for transfers.
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.
Notes for editors
- The new Banking Conduct of Business sourcebook (BCOBS) is detailed in the Policy Statement.
- A further Consultation Paper will be released in July 2009, on additional material for BCOBS, transitional provisions and minor consequential amendments to the Handbook.
- In November 2009 the FSA will become responsible for regulating most payment transactions (such as paying money into a current account) under the Payment Services Regulations (PSRs). This is European legislation which will harmonise the rules and standards applied to most payment transactions across the European Union.
- In light of these imminent changes, the FSA reviewed the existing arrangements for banking regulation, and consulted last year on whether it would be more effective to extend the FSA’s regulation across all aspects of banks relationships with their retail customers within its scope. That consultation finished in mid February, and BCOBS was produced as a result.
- BCOBS and PSRs together will form the Banking and Payment Services conduct regime (BPS), a new framework to deliver benefits for consumers where fairness will be central to FSA supervision and enforcement. The new framework will commence from 1 November 2009. The relationship between BCOBS and the PSRs is set out in Annex 2 of the Policy Statement.
- The FSA’s Payment Services Regulations Approach document [PDF], Perimeter Guidance [PDF] and Policy Statement were published on 30 March 2009 by the FSA.
- 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.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
