Borrowers to receive more protection under new code

02/11/2009

UK consumers are to receive more protection from a new code of lending which came into effect on November 1st, a financial body has claimed.

According to the British Bankers' Association, the new rules must be adhered to by lenders who provide consumers with access to banking and credit in the form of personal loans, credit cards and overdrafts.

The new code will cover issues including credit reference agencies and credit assessment, risk-based pricing principles for credit cards, debt collection and financial difficulties.

Robert Skinner, chief executive of the Lending Standards Board, said: "The lending code sets out what it means to be a responsible lender covering both credit assessment and the support that will be available if things go wrong.

"It will be followed by all significant providers of credit products who currently subscribe to the Banking Codes."

The new proposals come into effect from November 1st after the Financial Services Authority takes over responsibility for the non-lending part of the banking code.

Kevin Still, Eurodebt director, said: "From November 1st 2009, there are meant to be specific standards covering many aspects of everyday banking transactions that have been major concerns for customers, as witnessed by the huge rise in complaints about financial institutions in the first half of 2009.

"This is all designed to promote fairness to clients, but the ‘acid test’ will be in how this affects people in financial difficulty and how the lenders translate this into everyday policy in their debt recovery and financial hardship teams."

He added: "EuroDebt’s experience is that this can sometimes take some time to filter down to the coal face. Our focus is helping genuine consumers deal with their debts where they have taken a responsible attitude and sought advice with a long-term commitment to repay their borrowing."

Tags; Income Worries and Debt,

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