The Banking Code and You

January 2002 – Did you know that the Banking Code applies to building societies as well as banks?

The Banking Code is a voluntary code of self-regulation for basic good behaviour that banks and building societies are supposed to adhere to but many do not.  The code is produced by the British Bankers’ Association (BBA) in conjunction with the Building Societies Association (BSA).

It is supposed to be a code of good practice and it may give the impression that it is a mark of service excellence – but it is not.  It represents a baseline below which standards should not fall.  There is a danger that societies can advertise the fact that they conform with the code and thereby present an appearance of legitimacy to practices that may not be covered by the code and are not always in the best interests of members.  The code leaves much to be desired and is not a complete assurance against bad practices.

Usually banks and building societies do not appreciate receiving complaints or comments on improving their services.  However, an independent Reviewer has been appointed to receive your comments and, although this has not been widely advertised, she is inviting people to write to her.

What is wrong with the present code?

We do not believe that societies conform to code key commitment ‘a’, which is – “We will act fairly and reasonably in all our dealings with you” for the following reasons:

  • There is nothing on the cover to show that the code refers to building societies.  We would prefer a dedicated code.  Many building society members are unaware that it affects them.
  • In many branches copies are literally kept under lock and key.  We believe they should be on display alongside product literature and should receive maximum publicity.
  • Reference to the code is often buried in the very small print in product literature.
  • The present code has not stopped the practice of creating so called “superseded” accounts, which are then downgraded.
  • The code has not made societies conform to rulings made by the Ombudsman for all similar cases when a ruling has been made on a representative case.
  • The code allows societies one month delay to notify members when savings interest rates are reduced or put another way rate changes can be backdated by up to one month.  We believe the period should be two weeks maximum.
  • It allows savings interest rates on notice accounts to be changed adversely out of line with base rate movements without allowing members immediate access to their funds.
  • The current version of the code does not conform entirely with the requirements of the Office of Fair Trading.  The Ombudsman also expressed disappointment with the revisions to the code.  We believe that, although there may be consultation, the code is  weighted heavily in favour of the industry.
  • Members and potential members are not made aware of those societies that fail to comply with the code.
  • The review process should receive greater publicity as recommended by the government funded Banking Codes

Review Group.

The Banking Code did not arise because members were giving  building societies a hard time, quite the reverse.  There is a need for societies to conform to the spirit as well as the letter of the code.  The code should be for the benefit of members and not for the benefit of lawyers who are paid to find loopholes at the expense of members.