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Last Updated: Saturday, 26 January 2008, 15:26 GMT
'Small print' rules need changing
By Bob Howard
BBC Radio 4's Money Box

Albert Einstein
Would Einstein have understood his bank's terms and conditions?
Customers should be more clearly informed of changes to banking terms and conditions, the man responsible for reforming banking guidelines has said.

Independent consultant Mike Young says banks should send out a summary when they make alterations, not just the full new terms and conditions.

Consumer group Which? says customers often struggle to understand changes.

But the Banking Code Standards Board says banks are complying with its guidelines.


Businessman Nigel Shock from Middlesex was asked to read 24 pages of new terms and conditions when he logged on to his NatWest online account.

He told BBC Radio 4's Money Box programme he had no idea what changes had been made:
It is no good sending somebody 24 pages of copy... they are not going to be read
Martin Hocking, the editor of Which? Money Magazine

"It was a 24 page pdf document.

"There is nothing in the document to say what has changed, and I think that is wrong."

The consumers' group Which? has campaigned for some time for banks to be obliged to clearly point out alterations, and not just to send out a full new version of the terms and conditions.

Martin Hocking, the editor of Which? Money Magazine, says any changes need to be clearly spelt out:

"It is no good sending somebody 24 pages of copy and hoping they will guess where the changes are.

"They are not going to be read."

Banking code

How banks communicate changes to terms and conditions to their customers is covered in the Banking Code, the set of rules drawn up, and agreed to, by the banks themselves.

But what the Code says in this respect is ambiguous.

It says banks must give customers the "detailed wording" of the new changes, but does not make clear if sending a complete set of the new terms and conditions, without a summary, fulfils this.

It would make sense for everyone to be given a summary of the changes, rather than just the whole lot
Mike Young, independent consultant responsible for reforming banking guidelines
Mike Young, the independent consultant charged with proposing changes to the banking code, said initially he did not think any changes were necessary.

But when Money Box told him about the NatWest case, he changed his mind.

He said he now feels the guidelines now need to be amended:

"If I had known at the time there was that uncertainty, I would have made a recommendation to say that it would make sense for everyone to be given a summary of the changes, rather than just the whole lot."

NatWest's view

NatWest said its revised terms and conditions were 40% shorter than the old ones, and it believed they were both clear and accessible.

It said all its customers had been sent a copy in the post, as well as being offered an online version.

Robert Skinner, chief executive of the Banking Code Standards Board, says NatWest is complying with its guidelines:

"If they have rewritten their terms and conditions in more user-friendly language so the customer can better understand, then it would be difficult to list the changes."

BBC Radio 4's Money Box was broadcast on Saturday, 26 January 2008 at 1204 GMT.

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