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Banks required to lend responsibly.
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'Sympathetic' Banking Code Introduced
Writes Dan Drage dan.drage@consumerchoices.co.uk
A new voluntary banking code will be introduced from today, with an added directive for banks to help and advise those tumbling into debt.
The banking code, implemented by the British Banker’s Association, advises banks to consult customers they feel may be sliding into debt, and do all they can to prevent this from happening.
The onus has traditionally been on the account holder contacting their bank, but under these new guidelines banks are encouraged to take a more proactive stance and take preventative measures. The code also includes a pledge that banks will lend responsibly, and covers Building Societies too.
Vera Cottrel, principle policy advisor at Which?, is a critic of this new code, and feels that the measures taken do not go far enough:
‘A lot more could have been done to really benefit consumers, such as raising minimum credit card repayments.’
Banks will now be under obligation to provide customers with bite-sized, digestible terms and conditions before they take out loans or savings accounts. They’re additionally expected to assist their customers fully if they request to switch bank accounts.
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"This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties"
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Angela Knight, Chief Executive of the British Bankers’ Association, outlines the depth of research that underpinned this new code:
‘The long consultation process between the Treasury, Financial Services Authority, and Office of Fair Trading, has shown clearly what customers want and expect from their banks’
She continues:
‘This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties.’
Chris Eagle, Commercial Manager at Credit Choices, can see the new code having an immediate impact:
‘If this code is embraced by banks, then it should put a stop to activities such as Egg’s (www.egg.com) recent account termination spree, both at the point of sale and further down the line. If those ‘risky’ customers hadn’t been accepted as worthy borrowers in the first place, then there would have been no reason for the lender to suddenly stem their credit supply when the financial crunch hit.’
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