Lloyd's Maritime and Commercial Law Quarterly
BANKING PRACTICES REVISED
The Code of Banking Practice
Background
In a recent issue of the Quarterly, the present author reviewed the operation of the Banking Ombudsman scheme, making reference to the draft code on banking practice and its possible impact on the scheme.1 Since that paper was completed, the final version of the code has been published.2 The code is of immense practical importance: it provides objective guidance for the Ombudsman in performing his conciliatory and adjudicatory functions and, from a consumer rights perspective, represents a marked improvement on its draft predecessor,3 which for the most part simply reproduced existing good practice as defined by the banking industry.
The origins of the code can be traced to the Jack Report on banking services law, published in 1989.4 Essentially, Jack proposed a self-regulatory code governing bank-customer relations with, as a fall-back measure, the threat of a statutory code in the event of a self-regulatory code being adjudged an inadequate response to the
1. [1992] LMCLQ 227. For general accounts of the growth of Ombudsmen in the financial services sector, see: A. R. Mowbray, “Ombudsmen: The Private Sector Dimension,” in W. Finnie, C. M. G. Himsworth and N. Walker, (Eds), Edinburgh Essays in Public Law (1991); and R. W. Hodgin, “Ombudsmen and Other Complaints Procedures in the Financial Services Sector in the United Kingdom” (1992) 21 Anglo-Am. L.R. 1.
2. BBA, BSA and APACS, Good Banking—Code of practice to be observed by banks, building societies and card issuers when dealing with personal customers (December, 1991). The code has been operative since 16 March 1992. All references to banks in the text should be taken to include building societies and card issuers who have undertaken to operate the code.
3. BBA, BSA and APACS, Draft Code of Banking Practice—A Consultative Document (December, 1990).
4. Banking Services: Law and Practice: Report by the Review Committee, Cm.622 (1989) (hereafter “Jack Report”).
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