the very latest information direct to your pc…November 2007

Banking & Finance

Susan Younger
partner

Welcome to the November 2007 edition of our Banking E-news Update.

If myself or another member of the Banking Team can assist you with any banking issue then please do not hesitate to contact us.

In this edition:

• Companies Act 2006 (Commencement No.3, Consequential Amendments, Transitional Provisions and Savings) Order 2007
• BBA ready to implement new unclaimed assets regime
• Changes to Complaint Handling Rules under the Banking Code
• UK Lenders withdraw 40% of mortgage deals
• Banking Reform to protect depositors
• Tackling Fraud
• Quest 4 Finance Ltd v (1) John Maxfield (2) John Carter (3) Michael John Chesney [2007] EWHC 2313 (QB)
• Credit Card Cover for Overseas Purchases

Did you know…

Morton Fraser is a full service law firm. This month's FSA news and developments can now be found on our website via this link. Companies Act 2006 (Commencement No.3, Consequential Amendments, Transitional Provisions and Savings) Order 2007 On 1 October 2007, additional provisions of the Companies Act 2006 came into force. The full provisions of the Companies Act 2006 are being introduced in stages and should be fully in force by October 2008. The legislation aims to update current company law to reflect the requirements of modern companies.

Click here to see articles produced by Sam Price on the current changes to the law as of 1 October 2007 and Adrian Bell on Director’s Duties under the Companies Act 2006.   BBA ready to implement new unclaimed assets regime The British Banker´s Association confirmed that Britain´s banks are ready to implement the Government´s scheme to release unclaimed assets for community causes. The Government and the financial services industry have been working closely together to design the scheme and it could see up to £400 million released for use on community projects.

The Chief Executive of the BBA advised that efforts have been redoubled in an attempt to reunite people with their forgotten funds before the scheme is launched and that the account holder can reclaim their money at any given time. A media campaign earlier in the year alerted savers to the free service offered by the BBA to reclaim their forgotten funds and this summer more people submitted claims than during the whole of 2006.

It transpires, however that the Government is unwilling to legislate and have suggested that financial services organisations should manage the release of funds on a voluntary basis.

Click here to read to BBA press release.   Changes to Complaint Handling Rules under the Banking Code Section 15 of the Banking Code sets out rules by the Financial Services Authority for subscribers to follow in handing customer complaints. From 1 November 2007, the FSA is changing the timescales for complaints that are not resolved by close of the next business day.

The new complaint handling rules provide that subscribers to the Banking Code will:

On receipt of a complaint:

send the complainant a prompt written acknowledgement providing early reassurance that it has received the complaint and is dealing with it; and

ensure the complainant is kept informed thereafter of the progress of the measures being taken for the complaint's resolution.

By the end of eight weeks after receipt of the complaint, send the complainant:

a final response; or

a written response which:

• explains why it is not in a position to make a final response and indicates when it expects to be able to provide one;
• informs the complainant that he may now refer the complaint to the Financial Ombudsman Service; and
• encloses a copy of the Financial Ombudsman Service standard explanatory leaflet.

The Banking Code requires that all subscribers act fairly and reasonably in their dealings with customers and this will continue to be the case under the new FSA rules.

Subscribers are still required to follow Sections 15.1, 15.2 and 15.6 of the Code which inform customers of the ways in which a complaint can be made. Subscribers can also choose to maintain the time limits set out under Sections 15.3 and 15.4 of the Code as these demonstrate best practice beyond that required under the FSA's new rules.

Click here to read the BBA press release.   UK Lenders withdraw 40% of mortgage deals According to financial information company Moneyfacts, UK lenders have withdrawn 40% of their mortgage deals in the past 3 months.

54% of sub-prime mortgages have been discontinued and the number of mainstream mortgage deals has also dropped by 16% This drop represents an unusual development in an otherwise historically static market.

House prices have reached record levels of unaffordability and lenders are becoming increasingly cautious about lending these sums to people, particularly if house prices are set to fall in the next few years. Many mortgage lenders are re-assessing and reducing the products they offer, particularly those higher risk products.

The recent crisis at Northern Rock has undoubtedly had a bearing on the sub-prime market as lenders have found it difficult to borrow their funds in the financial markets to lend on as home loans. Buy-to-let mortgages in this market were worst hit, being more of a gamble for lenders, with the number of deals available dropping 72% since July.

Click here to read the BBC News Report.   Banking Reform to protect depositors On 11 October 2007, HM Treasury, the FSA and the Bank of England jointly published a discussion paper entitled “Banking reform – protecting depositors”.

The paper discussed current depositor protection and possible issues for review. It puts forward a case for preserving certain critical banking functions for a certain period ensuring continuati