New bank code is "disappointing"

Citizens Advice says not enough is being done in the new code

A new banking code of practice that has come into force is not going far enough in protecting customers, according to Citizens Advice.

The code has been criticised for still allowing banks to increase credit card limits without being asked and sending out unsolicited credit card cheques.

Financial institutions promise to treat customers more fairly in the code.

Banks must also become pro-active in identifying customers likely to get into financial trouble.

The list of commitments by the banks include not closing the accounts of complaining customers and checking whether borrowers will be able to repay before lending them money.

Angela Knight from BBA says it's key for banks to share information

Angela Knight, chief executive of the British Bankers' Association (BBA) says: "Responsible lending is about the bank having as much information on an individual as possible and now being able to share data with others in the financial services sector.

"It's also the very fact that you might have a customer whose pay back to you for a credit card or a loan maybe is alright, does not necessarily mean that they're paying back other loans that you may not be able to see," she added.

However, Citizens Advice claims banks will continue to allow consumers to get into higher levels of debt.

"What we would like the banks to do is to actually operate an opt-in system so if customers actually want to receive a credit card cheque, if they want to receive a credit card increase, they ask for it.

"We really don't think that we're asking for too much on this. We think it would sit nice and squarely with the banks' duty to lend responsibly", Citizens Advice told Working Lunch.

Some of the changes outlined in the new banking code

One issue not mentioned in the code is the charges for unauthorised overdrafts which have attracted many thousands of complaints.

The level of charges made to customers has been left up to the banks to treat as their own commercial decisions.

What do you think about the new bank code? Are the changes doing enough for customers? What is your experience of debt and the banks? Please get in touch if you have a comment or view on this topic.

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