Updates to Retail Banking Conduct Code in the UK

The FSA sought views on a proposed new framework for regulating retail banking conduct of business. This would replace the current two Banking Codes (the Banking Code and the Business Banking Code). The new regime be implemented on 1 November 2009, in line with the implementation of the Payment Services Directive (PSD), which is European legislation that will apply to most payment transactions carried out by banks and building societies as well as certain aspects of the operation of 'payment accounts'.

The new regime will involve the full application of our Principles for Businesses, and a new Banking Conduct of Business sourcebook (BCOBS). It will be monitored and enforced by FSA. BCOBS will comprise some new high-level rules (applying to retail banking services outside the scope of the PSD), and the transfer of existing conduct of business rules and guidance applying to deposit taking.

Financial Services Compensation Scheme: Review of limits and made rules for non-deposit limits. The FSA is implementing its proposals for changes to the non-deposit limits of the Financial Services Compensation Scheme (FSCS). These are:

· Increase in the limit for investments and home finance mediation to 100% of £50,000; and
· Amendment of the limit for provision of non-compulsory life and general insurance and mediation of non-compulsory non-investment insurance to 90% of the whole claim, with no upper limit. The limit for provision and mediation of compulsory insurance will continue to be 100% of the claim, with no upper limit.

The new limits will come into force on 1 January 2010, to allow firms to make the necessary changes to their disclosures to consumers to reflect the new limits.