Report: Banking code to become legally binding

03/12/2008

Banks who refuse to lend to consumers could face tough action from the City regulator.

The prime minister, Gordon Brown, is expected to announce later today that the bank's voluntary code will now be made legally binding, the Guardian reports.

In a further change from the current rules, the code will also be put under the control of the Financial Services Authority (FSA) - which has the power to fine firms who do not comply with its regulations.

Small business lending would also be affected by the change.

Since the onset of the credit crunch, many banks have pulled cheap loan deals from the market and toughened up their criteria for lending.

This has led to more people and businesses facing debt through higher repayments.

No mention of the banking code changes was made in today's Queen's Speech.

However, the speech - delivered at the state opening of parliament - outlined other financial commitments for the governments, including previously announced plans to introduce gateway savings accounts, aimed at people on low incomes.

Tags; Debt Management and Banking, Recent Graduate Debt, Young Family Finances,

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