Lending Watchdog Strenghens Customer Protection
The Lending Standards Board - an independent body - will look out forthe interests of borrowers and monitor the actions of lenders when a new Lending Code is launched on the 1st November.
The Lending Standards Board will oversee the operation of new industry standards - the Lending Code - which outlines the relationship between lenders and borrowers. The Code covers the credit and debt elements of the old Banking Code, other parts of which will be covered through the introduction of Financial Service Authority regulation of deposit taking. The Lending Code covers good practice in relation to unsecured loans, lending aspects of credit cards and charge cards and current account overdrafts.
The new Lending Code includes rules which apply to:
1. credit assessment and the use of credit reference agencies
2. the risk based pricing principles for credit cards
3. financial difficulties and debt collection
4. helping customers in debt who have a mental health condition
Robert Skinner, chief executive of the new Lending Standards Board, said:
"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."
ENDS
Notes to Editors:
1. The Lending code is co-sponsored by the British Bankers Association, the Building Societies Association and The UK Cards Association.
2. Copies of the Lending Code will be available on the sponsors' websites and also on the Lending Standards Board website
3. The Banking Codes, which formerly set out the relationship between financial services companies and their customers, ceases to operate at the end of October with new rules moving to an statutory footing at the FSA and the rules for unsecured credit remaining the responsibility of the Office of Fair Trading.
4. From 1 November 2009 the Financial Services Authority (FSA) 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.
Biographical Note
Robert Skinner is chief executive of the Lending Standards Board having been the CEO of the Banking Code Standards Board since 2006. The Lending Standards Board will monitor and enforce subscribing firm's compliance with the Lending Code.
