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The FSA will begin regulating banks’ and building societies’ day-to-day contact with their customers from 1 November 2009, covering everything from direct debits, payments, instant access and savings accounts through to unauthorized transactions and notification of interest rate changes.
This new framework will deliver wide-ranging benefits for consumers, including:
· Getting information up front. Banks will have to provide prospective customers with full information on the service or product that interests them. Previously, customers only received limited information up front, with the remainder following once they had signed up to the service or product. The change in approach will let consumers make more informed decisions.
· Advance notification of changes. Banks and building societies must provide advance notice of changes to key terms and conditions. For current and instant access accounts, they will have to give customers at least two months’ prior notice of any disadvantageous interest rate changes (except if the account explicitly ‘tracks’ a reference rate; e.g. 2 per cent above the Bank of England Base Rate, or the change is an explicit part of the contract).
· Unauthorized transactions. Where a customer claims that an unauthorized transaction has taken place, the bank must refund the amount unless they can show some good reason why they need to investigate the claim.
· Giving value when money is received. For current and instant access accounts, consumers will now begin receiving interest on money transferred into their account from the moment that the bank receives the funds. This is referred to as giving value, and will be extended to all accounts from 1 February 2010.
· Unexpected sums. If a debit is made from a customer’s credit or debit card, or indeed a direct debit, and it is more than they could reasonably have expected, the entire amount must be refunded by the bank unless they can provide evidence to justify refusing the refund. They must do so within 10 days.