The regulatory body, the Financial Services Authority (FSA), is introducing the new guide to help financial institutions comply with the recently-introduced regulations and to stop them changing customer contracts on loans and mortgages without any explanation.

Banks and building societies have received substantial support from the FSA to ensure that all concerned have a full understanding of the new details.

“It is clear that firms don’t understand how the regulations need to be applied. This good practice we’ve issued is to ensure that they do all have a better understanding of what they are actually allowed to do,” Anna Bradley, director of retail themes at the FSA, told BBC Radio Four.

Clear guidance on health insurance contracts such as critical illness and long term care policies have been targeted by the FSA as one area of importance for the industry to concentrate on because of its complex nature.

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