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You are viewing the version of the document as on 2023-04-11.

Timeline guidance

BCOBS 5.1 Post sale requirements

Service

BCOBS 5.1.1R

1A firm must provide a service in relation to a retail banking service which is prompt, efficient and fair to a banking customer and which has regard to any communications or financial promotion made by the firm to the banking customer from time to time.

BCOBS 5.1.2G

In determining the order in which to process payment instructions in relation to the retail banking service, a firm must have regard to its obligation to treat banking customers fairly.

BCOBS 5.1.3G

[deleted]7

Set-off

BCOBS 5.1.3AG

3To ensure compliance with its obligations under BCOBS 5.1.1 R and Principle 6, on any occasion where it proposes to exercise a right of set-off, a firm (other than a credit union) should, with respect to its dealings with consumers:

  1. (1)

    review the information available and accessible to the firm relating to the consumer's account, on an individual basis, and estimate the amount of any subsistence balance;

  2. (2)

    refrain from seeking to set off or combine:

    1. (a)

      any debt due from, or a debit balance on an account held by, a consumer against or with that subsistence balance;

    2. (b)

      any debt due from, or a debit balance on an account held by, a consumer in a personal capacity against or with any sum of money payable by the firm to the consumer or standing to the credit of the consumer in an account held with the firm, where the firm knows or reasonably ought to know that:

      1. (i)

        a third party is beneficially entitled to that money or that the consumer is a fiduciary in respect of that money; or

      2. (ii)

        the consumer has received that money from a government department, local authority or NHS direct payment body for a specific purpose or is under a legal obligation to a third party to retain and deal with that money in a particular way.

BCOBS 5.1.3BG
  1. (1)

    3If it becomes apparent to a firm after it has exercised a right of set-off that it has set off or combined a debt due from, or a debit balance on an account held by, a consumer against or with:

    1. (a)

      the consumer's subsistence balance; or

    2. (b)

      money payable by the firm to the consumer, or standing to the credit of the consumer in an account held with the firm, that falls within BCOBS 5.1.3AG (2)(b)(i) or (ii);

    the firm should refund to the consumer the sum debited from the account of the consumer in exercise of the right of set-off unless it is fair not to do so.

  2. (2)

    If, in the circumstances referred to in (1), the firm does not provide a refund of the sum debited from the account in exercise of the right of set-off, the firm should be able to justify that it is fair not to do so and should consider taking other remedial action having regard to its obligations under BCOBS 5.1.1 R and Principle 6.

Dealings with customers in financial difficulty

BCOBS 5.1.4G

Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

Moving a retail banking service

BCOBS 5.1.5R

A firm must provide a prompt and efficient service to enable a banking customer to move to a retail banking service (including a payment service) provided by another firm.

BCOBS 5.1.5AR

5A firm must provide a prompt and efficient service to enable a banking customer to move to another retail banking service (including a payment service) provided by that firm.

BCOBS 5.1.5BG
  1. (1)

    5In taking steps to ensure a service is prompt and efficient, in line with BCOBS 5.1.5AR, a firm should make appropriate use of the information and documents it already holds in relation to a banking customer.

  2. (2)

    Where, for example, an existing customer wishes to move to another account with the same firm and the firm already holds data and documents in relation to customer due diligence measures, including data and documents to verify the identity of that customer that are suitable for the purposes of anti-money laundering requirements, the firm should consider whether it would be unnecessarily duplicative to apply the same account opening procedures in that case as would apply to a new customer (although a firm should ensure its policies and procedures are consistent with the requirements of the Money Laundering Regulations and other legislation in relation to financial crime).

  3. (3)

    Where a firm provides an online or mobile telephone banking facility to a banking customer, the firm may wish to consider how the electronic process for moving to another account provided by that firm can be made most simple.

BCOBS 5.1.6G

Where a banking customer wishes to move a retail banking service and there are no arrangements between the firm the banking customer wishes to move from and the firm that the banking customer wishes to move to, the service provided by the former firm will extend only to providing a prompt and efficient service in respect of termination of the retail banking service, for example by closing an account and returning any deposit (with interest as appropriate) to the banking customer.

BCOBS 5.1.7G

Where a banking customer wishes to move a retail banking service and there are arrangements between the firm the banking customer wishes to move from and the firm that the banking customer wishes to move to, the service provided by the former firm will include providing a prompt and efficient service in respect of termination of the retail banking service, for example by closing an account, transferring any account balance and making arrangements in respect of any direct debits or standing orders.

BCOBS 5.1.7AG

6BCOBS 5.1.6G and 5.1.7G do not apply to a firm with respect to a switching service that the firm is required to offer under Part 3 of the Payment Account Regulations.

BCOBS 5.1.8G

A firm may find it helpful to take account of 6the Cash ISA to Cash ISA Transfer Industry Guidelines.4

4

Lost and dormant assets

BCOBS 5.1.9R

A firm must make appropriate arrangements to enable a banking customer, so far as is possible, to trace and, if appropriate, to have access to a deposit held (or formerly held) in a retail banking service provided by the firm. This applies even if:

  1. (1)

    the banking customer may not be able to provide the firm with information which is sufficient to identify the retail banking service concerned; or

  2. (2)

    the banking customer may not have carried out any transactions in relation to that retail banking service for an extended period of time.

BCOBS 5.1.10R

If a firm participates in the scheme under the Dormant Bank and Building Society Accounts Act 2008, it must inform a banking customer of this fact and provide appropriate information regarding the terms of the scheme on entering into communications with a banking customer regarding a dormant asset9.

Security of electronic payments

BCOBS 5.1.10AR

7A firm that allows a banking customer to make electronic payments must consider the risk of fraud and put in place appropriate procedures and technical safeguards to ensure that such payments can be carried out in a safe and secure manner.

BCOBS 5.1.10BG

7Such procedures should include authentication procedures for the verification of the identity of the banking customer or the validity of the use of a particular payment instrument, proportionate to the risks involved. Where appropriate, firms may wish to consider the adoption of ‘strong customer authentication’, as defined in the Payment Services Regulations, and specified in the SCA RTS. The FCA gives guidance on strong customer authentication in Chapter 20 of the FCA’s Approach Document. 8

[Note: see https://www.fca.org.uk/publication/finalised-guidance/fca-approach-payment-services-electronic-money-2017.pdf.]8

Firm's liability for unauthorised payments

BCOBS 5.1.11R
  1. (1)

    2Where a banking customer denies having authorised a payment, it is for the firm to prove that the payment was authorised.

  2. (2)

    Where a payment from a banking customer's account was not authorised by the banking customer, a firm must, within a reasonable period, refund the amount of the unauthorised payment to the banking customer and, where applicable, restore the banking customer's account to the state it would have been in had the unauthorised payment not taken place.

Banking customer's liability for unauthorised payments

BCOBS 5.1.12R
  1. (1)

    Subject to (2) and (3), a firm may, in an agreement for a retail banking service, provide for a banking customer to be liable for an amount up to a maximum of £357 for losses in respect of unauthorised payments arising:

    1. (a)

      from the use of a lost or stolen payment instrument; or

    2. (b)

      7from the misappropriation of the payment instrument.

  2. (1A)

    Paragraph (1) does not apply where:7

    1. (a)

      the loss, theft or misappropriation of the payment instrument was not detectable by the banking customer prior to the payment; or7

    2. (b)

      the loss was caused by acts or omissions of an employee or branch of the firm or of an entity which carried out activities on behalf of the firm.7

  3. (2)

    A firm may, in an agreement for a retail banking service, provide for a banking customer to be liable for all losses in respect of unauthorised payments:

    1. (a)

      where a banking customer has acted fraudulently; or

    2. (b)

      (subject to (3)) where a banking customer has intentionally, or with gross negligence, failed to comply with his or her obligations under the agreement for the retail banking service in relation to the issue or use of the payment instrument or to take all reasonable steps to keep its personalised security features safe.

  4. (3)

    Except where a banking customer has acted fraudulently, a firm must not, in an agreement for a retail banking service, seek to make a banking customer liable for any losses in respect of unauthorised payments where:

    1. (a)

      the unauthorised payment arises after the banking customer has notified the firm of the loss, theft, misappropriation or unauthorised use of the payment instrument;

    2. (b)

      the firm has failed to ensure that appropriate means are available at all times to enable the banking customer to notify it of the loss, theft, misappropriation or unauthorised use of a payment instrument; or

    3. (c)

      the payment instrument has been used in connection with

      1. (i)

        a distance contract; or

      2. (ii)

        a distance selling contract other than an excepted contract.

  5. (4)

    Except as provided in (1) to (3), a firm must not, in an agreement for a retail banking service, seek to make a banking customer liable for any consequential loss in respect of an unauthorised payment.

Value date

BCOBS 5.1.13R
  1. (1)

    2The reference date used by a firm for the purpose of calculating interest on funds credited to an account of a banking customer held with it must be no later than:

    1. (a)

      the business day on which the funds are credited to the account of the firm; or

    2. (b)

      in the case of cash placed with a firm for credit to a banking customer's account in the same currency as that account, immediately after the firm receives the funds.

  2. (2)

    Paragraph (1) does not apply to funds credited to a banking customer's account by means of a paper cheque.

Non-execution or defective execution of payments

BCOBS 5.1.14R
  1. (1)

    2Where a banking customer claims that a payment has not been correctly executed, it is for the firm to prove that the payment was authenticated, accurately recorded, entered in the firm's accounts and not affected by a technical breakdown or some other deficiency.

  2. (2)

    In paragraph (1) "authenticated" means the use of any procedure by which a firm is able to verify the use of a specific payment instrument, including its personalised security features.

BCOBS 5.1.15R
  1. (1)

    2Where a payment from an account of a banking customer is executed in accordance with the payment routing information provided in respect of that payment, it shall be treated as correctly executed by each firm involved in executing the payment.

  2. (2)

    Where incorrect payment routing information has been provided to a firm in respect of a payment:

    1. (a)

      BCOBS 5.1.16R and BCOBS 5.1.17Rdo not apply in relation to that payment;7

    2. (b)

      the firm must make reasonable efforts to recover the funds involved in the transaction; and7

    3. (c)

      if the firm is unable to recover the funds it must, on receipt of a written request, provide to the banking customer all available relevant information in order for the banking customer to claim repayment of the funds. 7

  3. (2A)

    A firm that is in receipt of funds as the result of the provision of incorrect payment routing information by a banking customer must co-operate with the firm that is seeking to recover the funds, in particular by providing all relevant information for the collection of the funds. 7

  4. (3)

    A firm and a banking customer may agree on a charge for taking the steps referred to in (2)(b). Any such charge must reasonably correspond to the firm's actual costs.

BCOBS 5.1.15AG

7For the purposes of BCOBS 5.1.15R ‘relevant information’ will include the name of the account holder into whose account the funds have been paid, and an address at which documents can be effectively serviced on that person.

BCOBS 5.1.15BG

7BCOBS 5.1.15R (2) (c) and BCOBS 5.1.15R (2A) may require a firm to disclose personal data about a customer to whom it provides a bank account where funds have been transferred to that account as a result of incorrect payment routing information. When providing information to the customer to ensure the fair and transparent processing of personal data as required by applicable data protection legislation a firm should take account of its potential obligations under BCOBS 5.1.15R(2)(c) and BCOBS 5.1.15R(2A).

BCOBS 5.1.16R
  1. (1)

    2Where a banking customer instructs or requests a firm to make a payment from his or her account and the payment is not correctly executed, the firm must, without undue delay:

    1. (a)

      refund to the banking customer the amount of the non-executed or defective payment; and

    2. (b)

      where applicable, restore the banking customer's account to the state in which it would have been had the defective payment not taken place;

      unless:

    3. (c)

      the firm can prove that the amount of the payment was received by another firm (referred to in this rule as "firm B") with which the relevant account of the intended recipient is held.

  2. (2)

    Where (1)(c) applies, firm B must:

    1. (a)

      immediately make available the amount of the payment to the intended recipient; and

    2. (b)

      where applicable, credit the corresponding amount to the intended recipient's account.

BCOBS 5.1.17R

2Where:

  1. (1)

    an instruction or request for a payment to be made from a banking customer's account is given by the intended recipient of that payment to a firm;

  2. (2)

    that firm can prove that it correctly transmitted the instruction or request to the firm with which the relevant account of the banking customer is held (in this rule referred to as "firm A"); and

  3. (3)

    the payment is not correctly executed;

    firm A must, as appropriate and without undue delay:

  4. (4)

    refund to that banking customer the amount of the payment; and

  5. (5)

    restore that banking customer's account to the state in which it would have been had the defective payment not taken place.

BCOBS 5.1.18R

Where a firm is required to give a refund or take other remedial action under BCOBS 5.1.16R or BCOBS 5.1.17R, it must also refund:

  1. (1)

    any charges for which a banking customer is responsible; and

  2. (2)

    any interest which a banking customer must pay;

as a consequence of the non-execution or defective execution of the payment.

BCOBS 5.1.19R

2Where the non-execution or defective execution of a payment by a firm is due to abnormal and unforeseeable circumstances beyond the firm's control, the consequences of which would have been unavoidable despite all efforts to the contrary, BCOBS 5.1.16R to BCOBS 5.1.18R shall not apply with respect to that incorrectly executed payment.