Lending Code launched to monitor lenders
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A new lending code is being launched to monitor the way lenders treat borrowers, which will be governed by an independent body called The Lending Standards Board.
The Lending Code which will act as a set of industry standards governing the relationship between lenders and borrowers.
Its rules apply to credit assessment and the use of credit reference agencies; the risk-based pricing principles for credit cards; financial difficulties and debt collection; and helping customers in debt who have a mental health condition.
The new code, launched on November 1, will replace existing Banking Codes which cease to operate at the end of October.
From November 1 the Financial Services Authority will regulate banks’ and building societies’ day-to-day contact with their customers covering direct debits, payments,instant access and savings accounts, unauthorised transactions, and notification of interest rate changes.
The FSA will not cover unsecured personal credit which will continue to be regulated by the Office of Fair Trading.
The code will be overseen by the Lending Standards Board headed up by Robert Skinner, who has been the chief executive of the Banking Code Standards Board since 2006.
The board will be responsible for enforcing compliance with the Lending Code.
Robert Skinner, chief executive of the Lending Standards Board, says: “The Lending Standards Board will ensure that the new Lending Code strengthens the protection customers will have when borrowing.
“It will independently monitor and enforce the Code and take action where lenders fall short of the Code’s standards.”
The Lending code is co-sponsored by the British Bankers’ Association, the Building Societies’ Association and The UK Cards Association.
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