Alistair Darling has proposed tougher new reforms to the financial system specifically targeting UK banks. Stricter regulations will be introduced with a view to giving the customer much greater consumer protection.

In a statement to the House of Commons, Alistair Darling said the financial system needed to ensure robust regulation, and banks and financial institutions should be better managed.

Some of the key proposals included:

• More help for consumers – a national money advice line funded by the banks and a strengthened deposit protection scheme
• Greater competition – the FSA and Office of Fair Trading to ensure that new players can enter the banking market
• Tougher banking regulation – banks required to hold more capital to cover any future losses and more powers for regulators to take over failing banks
• Executive pay – the FSA to report yearly on whether banks have met the new code of conduct on remuneration, and bank boards to be strengthened

The consumers association Which? hailed measures to increase protection for bank customers.

"We’re pleased that the government recognises the need to provide a better deal for consumers," said Which? chief executive Peter Vicary-Smith.

"Warnings about risky products, universally available money guidance and more choice on the High Street will all help to empower consumers in their dealings with the financial world."

This news comes at a time where more and more consumers are becoming aware of the fact they may have been mis-sold a financial product.

Stricter controls over banks should mean an end to issues such as the mis-selling of PPI, consumer credit agreements, whole of life insurance and unfair bank charges etc. 

BBC Business News

Agreements on money borrowed up to the amount of £25,000 before April 2007 could be found to contain errors. Whether it’s a personal loan, credit card, store card, hire purchase agreement, overdraft or car loan then these credit agreements and even some charges may become unenforceable in certain circumstances.

The Consumer Credit Act 1974 laid out a number of strict requirements for lenders and these must be met in order for a lending institution, such as a bank or credit card company, to be compliant when lending out money. Lenders are required to produce regulated credit agreements that are properly implemented and signed by both the customer and the bank or credit company.

For a loan to be enforceable means that all the Act’s requirements must be met. It also means that should any of those requirements be neglected, then the loan is unenforceable and that the customer is no longer obliged to pay back the money borrowed.

The customer’s loan documentation contains some of the information needed to determine whether the loan is unenforceable or not. This documentation needs to be read carefully to check whether the lender has factored in the costs of Payment Protection Insurance into percentage charges.

Should the loan documentation show no evidence of this inclusion, the customer could be eligible to have the loan investigated for potential invalidity. Not only would this mean no longer having to pay back the debt, but the original loan or credit card application entry could also be removed from the customer’s credit report.

It is also possible to go back through any old loan or credit card statements the customer may have and double check the interest costs and charges. If there are any which seem to have been incorrectly calculated, then this might also be a valid reason to have the customer’s loan investigated as being unenforceable.

When credit card limits have been increased without the customer’s knowledge or permission a claim can be made. If the customer didn’t request the limit increase then the customer’s credit card facility could also be considered unenforceable.

If the total amount of charges being applied to the customer’s credit are not disclosed fully and completely then the loan might also be unenforceable and there is a possibility that the customer could see the debt wiped out without having to pay another fee.