Debt -
Bank Code offers More support for those in Debt
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A new bank code which came into force on the 30th March dictates that banks must provide more support for customers facing debt.
The code says that banks must:.
• Clearly display vital information about unsecured loans and savings accounts in a standard summary box clearly visible for customers to see before purchasing a product.:.
• If customers wish to switch their current account to another bank, their present bank must advise and assist with the process:.
• The bank is obliged to supply information on tracing lost accounts when needed:.
• They must provide information on developments such as the forthcoming unclaimed assets scheme:.
• Be more clear and precise in informing customers on how to protect themselves and their accounts from fraud..
Instead of full responsibility lying with the customer to observe accounts and contact the bank regarding difficulties, banks will now be obliged to make the first move. Where banks see that a customer could be heading for trouble, they must contact the customer and ensure that they are aware of the situation..
The code ensures a fairer deal for borrowers and attempts to put a limit on unrealistic lending. Stricter regulations will be put in place meaning that where banks were previously simply obliged to act “sympathetically and positively”, they will now do more to avert difficult times for customers. .
Communication will be encouraged, with real solutions offered. Banks will encourage customers to seek independent free advice regarding their finances, offering information on places such as the Citizen’s Advice Bureau..
The new code encourages a more upfront relationship between banks and customers which should have a positive impact on the way in which debt is managed. With more communication, those facing difficulty can reach manageable arrangements with their banks before the situation gets out of control..
In addition, the banks will act more responsibly as lenders. Rigorous checks will ensure that a customer is fully able to manage mortgage repayments before lending. Income, credit history and other financial commitments will all be taken into account before credit is granted..
These changes reflect what research has shown customers want. The British Bankers Association says that: “The long consultation process, now complete, has shown clearly what customers want and expect from their banks. That has been the driver for these changes.” .
Although the changes herald a more supportive era for borrowers, consumer group Which? says more could have been done: “A lot more could have been done to really benefit consumers, such as increasing minimum repayments on credit cards and stopping companies from sending unsolicited credit-card cheques to their customers.”.
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