Lending watchdog created to strengthen customer protection

A new watchdog has been been created to look out for the interests of borrowers and monitor the actions of lenders when a new Lending Code is launched on the 1st November.

The Lending Standards Board is an independent body, co-sponsored by the British Bankers Association, the Building Societies Association and The UK Cards Association. The watchdog will oversee the operation of new industry standards, known as 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. It also 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 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.”

(Photo by Darwin Bell.)