BCOBS - comes into force 1/11/09

[Amethyst]

Reponse due Q2 2009








FSA consults on regulating retail banking conduct of business



FSA/PN/126/2008
04 November 2008
The Financial Services Authority (FSA) has today published a consultation paper proposing a new framework to regulate the way that banks treat their customers.
Currently, the Banking Code Standards Board monitors and enforces the voluntary Banking Codes governing current accounts, personal loans and overdrafts, savings, card services and ATMs.
Next year the FSA will become responsible for regulating banks and building societies payment transactions under the Payment Services Directive (PSD). The review published today considers whether it would be more effective to extend the FSA’s regulation across all aspects of banks' relationships with their retail customers. This would exclude credit, such as unsecured loans and credit cards, which is regulated by the Office of Fair Trading.
Jon Pain, FSA managing director of retail markets, said:
“Retail banking is going through a period of rapid change and regulation needs to keep pace with this change. We believe that in order to ensure that the regulatory model is fit to meet these challenges, now and in the future, the FSA should regulate the wider aspects of everyday banking for all consumers.
“We are working closely with the Banking Code Sponsors, Banking Code Standards Board, the Office of Fair Trading and consumer bodies to ensure we have input from all of the groups interested in this field.”
The FSA is proposing the following new framework:

• full application of the FSA’s Principles for Businesses to the regulated activities of accepting deposits and issuing electronic-money;
• new high-level rules applying to retail banking services outside PSD scope in a Banking Conduct of Business sourcebook (BCOBS);
• transfer of existing COB rules and guidance applying to deposit taking to BCOBS;
• monitoring and enforcement by the FSA, integrated into the wider risk-based approach to the supervision of the relevant firms and groups.

The FSA is inviting responses by 16 February 2009.
Notes for editors

1. See CP 08/19: Regulating retail banking conduct of business.
2. The Payment Services Directive will come into force in November 2009, and will introduce its own conduct of business rules affecting the majority of retail bank accounts.
3. Any changes made within banking conduct of business would apply only to retail deposit taking – as opposed to the OFT scope such as consumer credit (including credit cards)
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.