Banks are deposit takers and handle billions of pounds of our money. It's this area of their business that we going to look at how they are monitored not the other areas which fall under the Financial Conduct Authority such as lending and financial advice.
Banking Conduct of Business Rules
Firstly the BCOBS – or Banking Conduct of Business Rules – which work similarly to MCOBs and COBS.
- BCOB 1 states that banks have to adhere:
- BCOB 2 – Communications with customers must be fair, clear and not misleading, including It also restricts banks in promoting “bolt-on” products for a fee.
- BCOB 3 – places more rules on how banks deal with online customers.
- BCOB 4 – deals with how banks provide information to customers who have
- BCOB 5 – handles post-sale aspects in a fair manner, including product switching.
- BCOB 6 – deals with the cancellation of products and customer’s rights.
- BCOB 7 – states how banks publish bank account information.
Nothing mind-boggling and if you’re familiar with COBS and TCF, now called fair treatment of customers, nothing new.
Something a little shinier is the Payment Services Regulations
Payment Services Regulations
We’re talking about the massive rise in payment transfers from current and other accounts. Contactless is ubiquitous and very few people carry cash anymore preferring to use their card. The Regulations named companies in the market, Payment Institutions (PIs), and require that they seek proper authorisation to transmit Euros or Sterling.
PIs include banks, building societies, merchants, money remitters, PayPal. A couple you may not have come across before. Merchants are firms who take card payments but are not banks and remitters are firms who send money abroad, also not banks.
Payment Services Directive 2 is the Oscar winner and is designed to increase competition and enhance customer’s rights. The headline-grabbing part is to do with credit card authorisation to prevent fraud.
The last new name for you is the Payment Systems Regulator which governs all payment systems and is a subsidiary of the FCA.
The Standards of Lending Practice
BCOBs from earlier, only looked at deposits and current accounts, this practice standard focusses on lending. You’ve probably thought about CONC or the Consumer Credit rules which allow the FCA to govern this area, and you'll be right. Why they need extra standards, I don’t know, but they do. The spotlight is on loans, credit cards and overdrafts and it self-regulates on six areas:
- Promotions and communications
- Product sales
- Managing and servicing customers
- Money management
- Financial difficulty
- Vulnerable customers.
Very similar to BCOBs.