MONEY TALK By Stuart Cliffe Chief executive, National Association of Banking & Insurance Customers

Stuart Cliffe: New code has few answers

Better customer protection is always good news, but the new Banking Code to be introduced from Friday has improvements so slight you need a microscope to see them.

In future, banks have promised it will be easier to switch current accounts, to give clearer information about charges, and inform savings customers when they cut rates on their accounts by more than half a percentage point.

Sounds great.

But surely you might have expected that good business practice would require banks to do this anyway - the banking code only ensures very basic consumer rights.

And some of the new rights under the code are not worth the paper they are written on.

'Little protection'

Take the new rule that banks have to write to customers if they cut their savings rates by 0.5% during a 12 month period.

The banking industry is a long way from providing the sort of service that customers have a right to expect

But with Bank of England rates at a 40 year low, many bank instant access savings accounts pay less than 0.5%.

In addition, the reformed Banking Code is so couched in qualifications and double-speak that banks often have a way-out of offering good service, and consumers can be left scratching their heads.

In truth the code provides little real protection.

Most customers will not realise the code itself is subject to a further 50 A4 page "guidance note", published by the Banking Code Standards Board, to help interpret the phrases used.

For instance, the code's general promises to treat customers in financial difficulty "sympathetically and positively" has a two-page treatment all to itself in the notes.

Something is going wrong - the Financial Ombudsman Service last year noted a sharp 25% increase in complaints under the code.

Voluntary scheme

In short, the banking industry is a long way from providing the sort of service that customers have a right to expect.

Changes to the banking code Time limits apply if you move your account to another bank, and charges caused by error or undue delay will be waived. You will be told if your interest rate falls by a half-percent or more in relation to the Bank of England base rate in any 12 month period Better notification when promotional credit card interest rates come to an end

A more effective approach would be to include a comprehensive explanation of basic banking services in the code - what should happen when customers apply for, open, use or close an account, and what happens in the event of complaint.

Having this sort of specific information would help customers - and bank staff - agree on what is normally regarded as reasonable service, and would clearly show when a bank has failed to live up to requirements.

The difficulty, say the banks, is that the code is a purely voluntary arrangement and more specific requirements might cause individual banks to opt out of the scheme.