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Monday, 9 July, 2001, 13:39 GMT 14:39 UK
Banks 'must speed transfers'
Cracking the Code for Customers is aimed at improving customer service
Banking customers should get a better deal under a new Treasury-backed report
A Treasury report is calling for far reaching changes to the banking system and a fairer deal for customers.

Under the measures, banks must offer a five-day-guarantee over account transfers, which means they must pass on details of standing orders and direct debits to a new bank within five working days or face a 50 penalty.

Under the "five day start, five week finish" standard they must then complete the transfer within five weeks.

While we found that there is much to commend about the current system of self-regulation through voluntary codes, we believe there are several areas where more should be done to help bank customers and sharpen competition

DeAnne Julius, chairman of the inquiry

The measures are aimed at encouraging competition and choice for consumers - many people are put off switching accounts because of the hassle involved.

The proposals are outlined in "Cracking the Code for Banking Customers", which is the result of an eight-month study led De Anne Julius, a former member of the Bank of England's monetary policy committee.

Other recommendations

Central to the report are seven main recommendations aimed at ensuring that the banking codes, which set standards for the industry, safeguard consumers more effectively.

Dr Julius said: "While we found that there is much to commend about the current system of self-regulation through voluntary codes, we believe there are several areas where more should be done to help bank customers and sharpen competition."

Five-day guarantee on moving bank accounts
50 penalty if banks to do not transfer account details within five days
Customer service league tables
Annual statements for comparing rates
Banking and Mortgage codes should be sent to customers
"Positive data" from credit histories should be available to customers
Independent Reviewer should oversee industry codes

As well as measures to make transferring accounts easy, the report also calls for new Customers Annual Summary Statement (CASS)

These will give information on interest rates and charges, which will make it easier for customers to compare their banks' deals on current accounts, personal loans and credit cards with its competitors.

Current account holders and people with mortgages should be sent copies of the industry codes - the Banking Code and Mortgage Code every two years.

The report also recommends that they should have more access to "league tables". Most banks collate these figures, but are reluctant to publicise their results.

The league tables would be compiled by independent monitors, who would grade each bank on its compliance with the industry's code. These figures would then be made available to the public.

League tables should also be published for account switching and be published every six months.

Dr Julius was commissioned by the Treasury to investigate the voluntary banking code after it was criticised in the far-reaching Cruickshank report in March last year.

DeAnne Julius, former member of the Monetary Policy Committee
DeAnne Julius, an economist, led the report
The report's central recommendation to speed up switching accounts will be welcomed.

Consumer bodies are concerned by the dominance of the big four high street banks - Lloyds TSB, Barclays, HSBC and Royal Bank of Scotland including Nat West.

Critics says that this monopoly is largely due to the difficulties involved in switching accounts.

Under the current rules, banks and building societies must provide details of standing orders and direct debits to the new bank within ten working days.

Banks should also give details of any "positive data" from a customer's credit history. For example, when a new bank requires overdraft details before agreeing to a limit.

The report, which also looked at the Mortgage Code, recommends that complaints against mortgage brokers should be brought under the Financial Ombudsman Service's remit.

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See also:

04 Aug 00 | Business
Government warns banks
19 Feb 01 | Business
Banks come under rights spotlight
01 Jan 01 | Business
Better protection for bank users
16 Mar 01 | Business
Banks debate 'lifetime' account
06 Mar 01 | Business
Big banks 'operate monopoly'
21 Mar 01 | Business
Watchdog closes in on UK banks
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