Banking conduct regulation is set to get a credit-crunch overhaul

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By Rachel Jones
Know Your Money Editor

Britons who are fed-up with banks' behaviour may be encouraged to hear that the Financial Services Authority (FSA) will take over all retail banking conduct regulation from November. Its remit will cover deposit taking and payment services and the new FSA rules will have to be followed by all credit unions, building societies and banks.

Changes include giving customers a helping hand when they want to switch bank accounts under a "prompt and efficient service", the FSA says. In the past, financial services providers have taken too long to allow people to switch their cash individual savings accounts, much to their annoyance. And rather than giving new customers information about products and services, banks must provide this information before an individual becomes a customer so they can decide what is best for them.

The new rules will also require financial services providers to treat customers fairly, especially if they are struggling with their monetary commitments or trying to process payments.

Jon Pain, FSA retail managing director, states: "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."
But why are new rules required for the UK banking system?

Mistrust of credit-crunched consumers

The British Bankers' Association (BBA) is aware that financial stability is critical to getting the UK economy back on track. The BBA claims that banks are committed to helping businesses and consumers through the recession and will make more mortgages available to help cash-strapped Britons get on to the property ladder or remortgage their property when coffers dry up.

Commenting on Chancellor of the Exchequer Alistair Darling's announcement that a white paper is set to be published detailing financial regulation, the BBA says: "This white paper will be an important one for the industry and needs to create the right balance: restoring confidence and trust in the UK financial sector whilst reinforcing its ability to compete in the global marketplace."

As well as the money they have stashed in banks, building societies and credit unions, the financial climate means that people are becoming particularly concerned about the safety of their pension pots. The National Association of Pension Funds (NAPF) says that confidence in pension schemes has to improve and therefore protecting pension schemes is essential. Its comments come after the Pensions Regulator reassured consumers that anyone found to be undergoing risky practices when it comes to the hard-saved cash of Britons will be clamped down on. It also reminded people of the importance of whistleblowers if they think dodgy dealings are going on.

A spokesperson for the NAPF asserts: "It is important to make clear that the vast majority of schemes are well run by dedicated managers and trustees working on behalf of members.

"Protecting the interests of members is vital if confidence in pension is to be rebuilt, so the regulator's announcement is a timely and helpful reminder to trustees and managers. As the regulator itself says though, fraud is very rare."

Taking advantage of the desire to invest in the recession

Many over-65s are looking into buying shares to protect themselves from troublesome savings accounts and depleting pension pots. But criminals are targeting this money-conscious section of society by selling non-existent shares, the FSA warns. A recent survey shows that 35 per cent of people targeted by share fraudsters last year were over the age of 65. And almost a quarter of Britons in this age group think that they could become victims of fraud over the coming months. But despite such concerns, nearly half of these individuals admit they do not think there is enough information on hand to protect themselves from criminal activity, the research reveals. Furthermore, 41 per cent of people admit that they do not know that fraudsters can use personal details found in mortgage applications, driving licences and passports to commit financial fraud.

Chris Pond, FSA director of financial capability, says: "Fraudsters, like all criminals tend to prey on the most vulnerable people and our research shows this is definitely the case with criminals who commit financial crimes.

"This is a clarion call to everyone that we cannot sit back and let honest people lose their hard-earned money to unscrupulous individuals."

Agreeing with his claims, charity director for Age Concern and Help the Aged Michelle Mitchell states that a new partnership between the two organisations and the FSA will clamp down on criminals and make sure that older people's hard-saved cash and life savings are protected as much as possible.

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