Bank code a 'wasted opportunity': Consumer Association says voluntary agreement should be replaced by one enforceable by law

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SIR Bryan Carsberg, director general of fair trading, and the Consumers' Association both attacked the revised Code of Banking Practice published yesterday for wasting an opportunity to increase consumer protection.

The Consumers' Association said there was only one meaningful change from the original voluntary code launched two years ago: banks and building societies will have to notify customers two weeks in advance of the interest and charges to be deducted from their accounts.

The association attacked the code for having no teeth, and said it should be replaced by a statutory code enforceable by the courts.

Sir Bryan welcomed improvements on the original voluntary code launched in 1992. 'But I am disappointed that the code fails to take account of the banks' and building societies' increasing emphasis on the sale of financial services,' he said.

'In particular, they have missed the opportunity to promise to give 'best advice' to bank customers who are increasingly being offered a myriad of financial products, particularly as banks move further into life insurance, with or without links to mortgages, investments and pensions.'

Sir Bryan also welcomed the code's insistence that institutions obtain written permission from customers to pass on information about them to subsidiaries, for the purpose of cross-selling products.

'But the principle of confidentiality requires that details of personal accounts are not passed, without express consent, to a bank's financial services sales team or company.

'Some banks are side-stepping this principle, and the revised code does nothing to stop them.'

Jean Eaglesham, head of the Consumers' Association's money policy, said banks were dragging their feet over notifying customers on charges.

This does not become compulsory until 31 December 1996. The Office of Fair Trading also attacked this delay. The National Consumer Council said the new code was a lost opportunity, and called on banks to list their tariffs and explain their complaints procedure on every statement.

The second edition of the code was produced by a review committee chaired by Sir George Blunden. Ms Eaglesham said: 'The review committee is the classic watchdog that doesn't bark in the night. They've said this isn't a customers' charter, it's a code of practice. Customers will get nothing out of this.'

Some banks already notify customers: National Westminster, Bank of Scotland, Clydesdale, TSB and Norwich and Peterborough Building Society. Lloyds is introducing it from 10 June and Barclays will do so next year.

The first edition of the code was produced in March 1992 by the British Bankers' Association, the Building Societies' Association and the Association for Payment Clearing Services.

A handful of foreign banks have not subscribed to the code along with Marks and Spencer, which withdrew from consultation over the code at an early stage.

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