The FSA makes a popular move
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Firstly, let me apologise to regular readers of this blog for the disruption of service recently. A lot has happened while I have been away so I will try to catch up as quickly as possible.
Let’s begin with a fun story on one of my favourite topics, the banks. In what will be one of the most applauded moves ever from the Financial Services Authority (FSA), they are proposing to fine banks which do not offer an acceptable standard of service.
At present, consumers are protected by a voluntary code that offers guidance on how banks should behave towards retail banking customers. This does not carry the threat of fines. The FSA is aiming to replace the existing voluntary code with a tightened and enforceable set of rules and regulations that would apply to all major financial institutions.
It is hoped that this will ensure customers are treated fairly and are kept informed as well as make it easier to switch accounts.
If the proposed changes go ahead, the FSA will oversee how banks deal with their day-to-day customers, with a team carrying out mystery shopping exercises to make sure they are being treated fairly.
The rules will include measures to make it easier for people to switch accounts between different providers, and they will also be given more notice of interest-rate changes.
The FSA has in the past been critical of institutions for delays when customers wanted to switch their cash Individual Savings Account (ISA) to a different bank or building society. It will now require banks to provide prompt, efficient and fair service for their customers, and offer information about their accounts at the appropriate time.
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 bank or building society.
A spokesman from the consumers’ association Which?, said of the proposals, “The FSA has to get tough as a regulator and use its full range of powers to keep banks in check. If it relies on the industry to develop its own code, consumers could find themselves worse off. Instead of closing the stable door after the horse has bolted, it must be proactive in finding and dealing with problems or consumers will lose out.”
Responsibility for treating customers fairly over borrowing, such as overdrafts and credit cards, will remain with the Office of Fair Trading.
I can’t help but wonder why the requirement that the banks provide prompt, efficient and fair service and offer information about their accounts at an appropriate time, requires any legislation or intervention from a watchdog at all. However, this is the situation we are in.
I for one look forward with glee to the day my account is credited by my bank because I have received poor service from them. I imagine many people will make extra visits to their local branches.
Looking at the wider picture, however, this is a long overdue measure that continues the power shift away from the large banks and back to the consumer.
