The Lending Code is industry guidance sponsored by the British Bankers' Association (BBA) the Building Societies Association (BSA) and the UK Cards Association, and sets standards for financial institutions to follow when they are dealing with their personal and small business customers. The Code addresses current account overdrafts, loans, credit cards and lending to micro-enterprises and charities. The Code is available here.
An updated version of the Code has been launched from the end of March 2011 to provide improved protections for borrowers. This follows an independent review by Professor Lorne Crerar which has resulted in more than 30 new provisions. Key recommendations being adopted include:
- stronger requirements for responsible credit assessment;
- new provisions on customers’ ability to opt-out from unarranged overdrafts;
- more support for customers who may be in, or approaching, financial difficulties;
- extension of the temporary breathing space moratorium on debt collection to customers using “self-help”;
- new standards on the appropriate use of the right of set-off; and
- further assistance for customers in financial difficulty who have a mental health condition.
From April 2011 plain language guides to the Code will be available in branches and online for both personal and small business customers. From July 2011 the plan is for all new borrowing customers to be provided with a copy of these guides.