The UK banking industry has committed itself to responsible lending as part of an overhaul of the voluntary code of conduct governing the way it treats its customers.
The revised Banking Code comes as the global banking industry is abruptly reining in its lending in response to a sharp rise in defaults by less creditworthy US mortgage customers, many of whom were offered cheap home loans over the past few years.
The sub-prime mortgage crisis has made credit for businesses and consumers alike more expensive, and could tip the US and UK economies into recession, analysts say.
The revised Code, which comes into force today, also commits banks to bolstering their credit checking procedures before approving loans, and to providing more help for customers who find themselves facing financial problems.
"This new Banking Code gives strong commitments that banks will lend responsibly, and will help customers who may be heading towards financial difficulties," said Angela Knight, chief executive of the British Bankers' Association.
"The long consultation process, now complete, has shown clearly what customers want and expect from their banks. That has been the driver for these changes."
The code also sets out that banks must:
* Provide customers with important information about unsecured loans and savings accounts in a standard summary box before they purchase a product
* Give help to consumers switching their current account to another bank
* Provide customers with information on how they can trace lost accounts, including details on the forthcoming unclaimed assets scheme
* Give customers greater clarity on the time it takes for cheques to clear
* Offer customers the most up to date information on how to protect their accounts from fraud
* Inform customers about the alternatives to chip and Pin cards for people who are unable to use these because of a disability or medical condition.
The new code also prohibits banks from closing a customer's current or savings account simply because they have made a complaint. This issue came to the fore in the wake of the first complaints about unauthorised overdraft charges, when a number of banks tried to close the current accounts of people who attempted to get refunds.
Banks are also prohibited from upgrading a customer from a free account to a fee-paying one without their permission, and they must give at least 12 weeks notice before they close or move a branch.
The banking code is voluntary and is reviewed every three years. The new code follows an independent review and a consultation with consumer groups, the Treasury, Financial Services Authority and Office of Fair Trading.
But consumer group Which? said the new code was a missed opportunity, adding that more could have been done to protect consumers at a time when many people were struggling with their finances.
Vera Cottrell, principal policy adviser at Which?, said: "A lot more could have been done to really benefit consumers, such as increasing minimum repayments on credit cards and stopping companies from sending unsolicited credit card cheques to their customers.
"It is encouraging to see new measures such as summary boxes on loan and credit card statements, which will help people to better understand the real cost of their borrowing.
"Which? has called for an overarching principle of fairness to be included in the code and we will judge the code's effectiveness on whether this is achieved.
"We want this to go further than the rules already in place - to be effective the new principle of fairness will have to add value to the code and not simply be window dressing."