From 1st November 2009 the FSA have revised the way banks deal with customers - we summarise the changes and how they'll affect you.
Until 1st November 2009 the Banking Codes Standards Board (BCSB) had the responsibility of governing how all banks and building societies treated their customers.
The BCSB were an independent body sponsored by the BBA (British Bankers Association), the Building Societies Association (BSA) and the Association for Payment Clearing Services (APACS).
They set standards for anything from how much information about financial products and services we’re given as customers to how quickly money is transferred between our accounts.
However these practices are now being regulated by the FSA, who have stepped in to the situation in an attempt to sharpen up some banking procedures and ensure that customers are ‘treated fairly’. So what are the changes and how will they affect you?
Speedier switching
One of the main changes is a speedier and more efficient service when it comes to switching bank accounts. This could include a customer switching from one bank account to another provided by the same bank, or switching between banks.
This will be especially relevant to you if you are thinking of transferring your cash ISA or current account to a new provider. In the past customers have found this to take some time, even several months; but banks will now be required to carry transfers out more quickly to prevent you losing interest on your balance during the switch.
Speedier payments
The electronic transfer of money between accounts will also have to be sped up. From early 2010 the FSA will require payments to land in the receiving account by close of business the next working day – previously this would have taken 2-3 working days.
What’s more, you’ll lose less interest when you move money from one account to another – as the funds will start earning interest from the moment they land in your current or savings account.
Clearer information
The way in which banks provide information on their products and services will also be revised by the FSA.
In the past customers have only been provided with the very important details of a product (such as the small-print terms and conditions) at the point of taking up that product. However from now on this information will be available earlier on – at the point, the FSA says, ‘when people really need it – when they are making the decision whether or not to become a customer’.
As such it’s hoped by the FSA that customers will be able to make more of an informed decision about which services they wish to take up, and will be better placed to choose products that suit their needs.
Advance notice of changes
If an interest rate on a savings account is going to be cut by a bank or building society, customers must now be given 2 months’ notice of this change. This will provide enough time for you to find another home for your savings if the rate cut is particularly severe.
Additionally, from May 2010 onwards customers will be sent advance reminders when an introductory rate on their savings account, credit card, or other financial product is going to end.
Fairer treatment
‘Treating customers fairly’ is to become the paramount concern of banks and building societies when it comes to their day-to-day contact with the consumer.
Though the real meaning of ‘fairness’ is somewhat open to interpretation and may be implemented in different ways by different banking institutions, this should mean that the customer is made more aware of changes to their accounts before they take place, provided with transparent information at the point of signing up for services, and treated with quality customer service not just at the beginning of a banking relationship but throughout the duration of that relationship.
To help cement these changes, the FSA has stated that they will fine banks and building societies if they don’t comply with the new rules – thereby hopefully ensuring that we’ll start to see the effects of these changes before too long.
