New Banking Code promises more support for consumers

Banks and building societies have vowed to provide more support for borrowers slipping into financial difficulties.

The new revised Banking Code – the self-imposed regulation from the industry – is aiming to increase fairness and includes a commitment to “responsible lending”.

As US subprime losses – which sparked the credit crunch – weigh heavily in the banks’ minds, stronger credit assessments are also to be brought in.

Consumers are promised clearer information about products, as well as more help for those heading to financial difficulties.

Banks will also be stopped from closing accounts if customers make a complaint – a practice that has caused significant criticism for firms as people who complained about bank charges found their accounts removed.

Angela Knight, chief executive of the British Bankers’ Association (BBA), said: “This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties.”

However, there have been calls for the banks to stop being self-regulated and for the code to go further.

Vera Cottrell, principal policy adviser at consumer watchdog Which?, said: “A lot more could have been done to really benefit consumers, such as increasing minimum repayments on credit cards and stopping companies from sending unsolicited credit card cheques to their customers.

“A great opportunity has been missed to do more to protect consumers at a time when so many people are struggling with their finances.”

She added the principle of fairness in the codes was simply “window dressing”.

The Bank Code itself states: “We promise we will treat you fairly and reasonably when providing you with products and services covered in this code.”

The promise of fairness covers clearer advertising and information about how accounts work and interest rate changes, as well as to “deal quickly and sympathetically with things that go wrong and consider all cases of financial difficulty sympathetically and positively”.