Lately I've been whining on and on about the seeming abuse of consumers by members who subscribe to the British Bankers' Association banking code.

More information has come to light from the loyal readers of this articles section regarding the Banking Code and its application in addressing abuse of the code by consumers that are attempting to resolve their difficult financial situations with an Individual Voluntary Arrangement (IVA). (That was my version of a run-on sentence.)

Up till now I've been winging about certain sections of the Banking Code and how creditors, in their rejections and non-consideration of Individual Voluntary Arrangements (IVA), having been flagrantly abusing their participation in the BBA Banking Code.

In particular, the seemingly intentional disregard for the sections 2 and 14 of the banking code by creditors like HSBC, Northern Rock, MBNA, Capital One and anyone identified in the recent Insolvency Exchange communication "Important Changes to TIX compliant Individual Voluntary Arrangement ("IVA") Fee Structures".

So here are the sections of the code that, in my humble opinion, are being disregarded.

Class, let's open our books to Section 2 of the Banking Code where it says:

We promise that we will act fairly and reasonably in all our dealings with you by meeting all the commitments and standards in this Code. The key commitments are shown below.

We will make sure that our advertising and promotional literature is clear and not misleading and that you are given clear information about our products and services. (See the recent Northern Rock article for an example of this in practice.)

We will deal quickly and sympathetically with things that go wrong and consider all cases of financial difficulty sympathetically and positively. (That part made me laugh so hard a little bit of wee came out.)

Now let's look at Section 14 of the Banking Code that proclaims:

14.1 We will consider cases of financial difficulty sympathetically and positively. Our first step will be to try to contact you to discuss the matter.

14.2 If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties. With your cooperation, we will develop a plan with you for dealing with your financial difficulties and we will tell you in writing what we have agreed.

14.3 The sooner we discuss your problems, the easier it will be for both of us to find a solution. The more you tell us about your full financial circumstances, the more we may be able to help.

Those That See, Know

Those that help people with debt problems will tell you that many creditors don't actually honour these sections of the code and responses that have been reported are that the creditors seem to believe that the Banking Code is voluntary. So I assume that means they think they don't have to comply with the code.

But an interesting argument made to me today is that while participation in the Banking Code is voluntary and banks are not required to be subscribers to the code, once they are and agree to abide by it, they should.

The good news is that there is an entity that you can make a complaint to if you feel that your bank, and subscriber to the Banking Code has not treated you in accordance with the code.

Is the Banking Code Standards Board the White Knight We Are Waiting For?

Apparently the Banking Code Standards Board has "some" authority to slap Banking Code violators on the wrist by shaming them in public. The Banking Code Standards Board site has a link to information about how to complain about a Banking Code members bad behaviour.

So if you are an Insolvency Practitioner, you might want to consider encouraging consumers that you are trying to represent to file a complaint with the Banking Code Standards Board if their IVA or debt resolution plan has been unjustly rejected.

Sean just walked into my office and asked me if I had heard of the PM e-petition. No, but it sounded interesting so I took a look. Apparently anyone can start an online petition campaign about requiring the OFT and/or FSA to have governmental statutory control over banks that fail to comply with the Banking Code.

I don't know anyone that has started an online petition but the 10 Downing Street petition site states "You can now both create and sign petitions on this website too, giving you the opportunity to reach a potentially wider audience and to deliver your petition directly to Downing Street." Who knows, maybe it will do some good to help defend consumers.

If anyone starts a petition, feel free to post the link to the Banking Code 10 Downing Street e-petition in the comments section below.