December 06, 2008

Patience with the banks has finally run out. The cosy system of self-regulation that governs the way that banks treat customers is to be wiped away, it emerged this week. From next year the Financial Services Authority (FSA), the chief City watchdog, will take over the policing of retail banking.Few would disagree that savers need stronger protection when battling the banking industry. The existing banking code has acted as window dressing while poor service and bad practice remain rampant. The huge number of complaints to our Troubleshooter column is proof of that. Banks entice savers into accounts that are not in their best interests, mislead customers about fees and ignore legitimate complaints in the hope that they will go away.

During the credit crunch, the City regulator has often seemed slow, timid and out of touch. Too often it has been caught on the back foot, mopping up after milk has been spilt rather than preventing it happening in the first place, Northern Rock being the classic case. The FSA appears to be fighting a losing battle to stay on top of a burgeoning workload.