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ombudsman news

issue 19

August 2002

the business banking code

The Banking Code has been around now for just over ten years and has reached its fifth edition. It has been open to criticism from some quarters - not least because it is both written and approved by the industry itself. But it has undoubtedly played a significant part in improving standards.

The Code is reviewed regularly and we published our submission to the current review in the March 2002 edition of ombudsman news.

In previous submissions, the former Banking Ombudsman Scheme had suggested that a similar code be set up to protect the interests of its small business customers.

There seemed no good reason to us for not having such a code - particularly bearing in mind that when the Banking Ombudsman Scheme was set up in 1986, it was open to sole traders and partnerships right from the start. And nearly ten years ago it was widened to cover small companies.

So we welcome the new Business Banking Code - which came into force on 31 March. We have already started to apply it where it is relevant to the cases we receive.

We also welcome the Business Banking Code's similarity to the Banking Code. This will facilitate promotion of the Code principles, staff training and customer protection.

But there is one significant area where the new Business Banking Code goes further than the Banking Code. The new Code covers merchant services (sometimes called merchant acquiring). Merchant services are the facilities a bank provides to allow its business customers to accept debit and credit cards for paying goods and services.

We were anxious for merchant services to be covered by the new Business Banking Code. It's often a difficult area, and we receive a disproportionate number of complaints from business customers about problems with their merchant services facilities (the December 2001 edition of ombudsman news gives some typical examples). So, not only have our views on this point been taken into account in the drafting of the new Code, but we're now able to look to it to help us resolve this type of complaint.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.