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Regulating banks' contact with customers

From 1 November 2009, the Financial Services Authority (FSA), the UK’s financial services watchdog, will regulate banks’ and building societies’ day-to-day contact with their customers.

This is expected to benefit consumers in a number of ways, including:

Getting information up front

Banks will have to provide potential customers with full information on the service or product that interests them. Before now, customers only received limited information up front, with more information following once they had signed up to the service or product.

Advance notification of changes

Banks and building societies must provide advance notice of changes to key terms and conditions. 

Unauthorised transactions

Where a customer claims that an unauthorised transaction has taken place, the bank must refund the amount. This is unless the bank can show some good reason why they need to investigate.

'Giving value' when money is received

For current and instant access accounts, consumers will begin receiving interest on money transferred into their account from the moment the bank receives the funds. This is called ‘giving value’ and will be extended to all accounts from 1 February 2010.

Unexpected sums

If a debit is made from a customer’s account and it is more than they could reasonably have expected, the entire amount must be refunded. This is unless the bank can provide good evidence not to. Refunds must happen within ten days.   

Dan Waters, the FSA’s director of conduct risk, said: "New regulations will put banking customers in the driving seat by setting down clear standards that people can expect from their institution, like speeding up payments between accounts, adequate notice of changes in terms and conditions, and smoothing the procedure for querying an unauthorised or unexpected transaction.

"If firms fall short of these standards or fail to treat their customers fairly, the FSA will take action."

Money remitters

From 1 November 2009, the FSA will also regulate money remitters - firms that transmit money across the world. 

For the first time their customers will have the protection of the Financial Ombudsman Service.

Other benefits for customers of money remitters include:

• more information before they commit to using a remitter’s service - such as how long it will take and how much it will cost
  
• payments clearing more quickly where transfers are made within the European Economic Area – the business day after the remitter receives the money

Further information

• Financial Services Authority Opens new window

• The Financial Ombudsman Service Opens new window

More on Directgov

• Financial problems and complaints (money, tax and benefits section)

• Bank accounts and banking products (money, tax and benefits section)

• Savings and investments (money, tax and benefits section)