New Lending Code Launched

The Lending Standards Board (LSB) has launched a new code to monitor the actions of lenders. The Lending Code, launched on 1st November 2009, and overseen by the newly-formed LSB, covers good practice in relation to unsecured loans, lending aspects of credit cards and charge cards and current account overdrafts. It covers the credit and debt elements of the old Banking Code.

The Code, to which adherence to voluntary, outlines how subscribers to it should be sympathetic and positive when considering a customer’s financial difficulties. "Although there is an onus on customers to try to help themselves the first step, when a subscriber becomes aware of a customer’s financial difficulties, should be to try to contact the customer to discuss the matter," the code states.

LSB chief executive Robert Skinner says: “The Lending Standards Board will ensure that the new 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.”

Other parts of the old Banking Code will now be covered through the introduction of Financial Services Authority (FSA) regulation of deposit taking. The FSA will begin regulating banks’ and building societies’ day-to-day contact with their customers from 1 November 2009. Their remit will include everything from direct debits, payments, instant access and savings accounts through to unauthorised transactions and notification of interest rate changes.

The FSA will also now regulate money remitters - firms that transmit money across the world and will mean that, for the first time, their customers will have the protection of the Financial Ombudsman Service.

Areas of retail banking which still fall outside the FSA’s remit, such as overdrafts and credit card lending, will continue to be regulated by the Office of Fair Trading under the Consumer Credit Act.