Banking Code to have statutory powers
by Gill Montia
Story link: Banking Code to have statutory powers
New measures announced by prime minister Gordon Brown at yesterday’s State Opening of parliament mean that the voluntary banking code currently overseen by the British Bankers’ Association will be replaced by a statutory code.
The reform will expose banks and building societies to large fines if they fail to treat customers fairly by, for example, not giving advance notice of changes in interest rates or withdrawing overdraft facilities.
The changes are likely to be embodied in the Banking Reform Bill, which will also provide the Bank of England, Treasury and Financial Services Authority with new powers to intervene in a banking crisis.
In addition, the Financial Services Compensation Scheme is to be overhauled to ensure it pays out promptly to depositors caught up in a collapsing financial institution.
Included in the Queen’s Speech was an outline of a proposed Savings Gateway Bill aimed at workers in receipt of certain benefits and tax credits.
Some low paid workers will become eligible for a contribution towards their savings pots, from the Treasury.
Finally, the Government has announced further help for middle-income mortgage borrowers who are falling behind with repayments because they have lost all or part of their income.
In a scheme guaranteed by the state, homeowners will be able to approach their lenders to request up to two years’ deferment of part of their monthly interest payments.
The unpaid interest will then be added to the outstanding mortgage balance.