The Lending Code is a voluntary code of conduct on how banks, building societies and credit card providers should deal with lending to consumers, micro-enterprises and charities with an annual income of less than £1 million. A micro-enterprise is defined as a business that employs fewer than 10 people and has a turnover or annual balance sheet that does not exceed €2 million.
The Code is independently monitored and enforced by the Lending Standards Board (LSB). The key commitments of subscribers to the Code include:
- To make sure that advertising and promotional literature is fair, clear and not misleading and that customers are given clear information about products and services
- Customers are to be given clear information about products and services before, during and after the point of sale, including how they work, their terms and conditions and the interest rates and charges that apply to them
- Subscribers will lend money responsibly
- Subscribers will deal quickly and sympathetically with things that go wrong and act sympathetically and positively when considering a customer’s financial difficulties.
The LSB has recently issued an update to the Lending Code, which among other things:
(i) reflects the Financial Conduct Authority’s role as the new regulator of the consumer credit market and the application of the Consumer Credit Sourcebook;
(ii) includes reference to debt collection agencies and debt purchase firms who can now subscribe to the Lending Code in their own right;
(iii) amends the wording of some provisions contained in the Credit Assessment section;
(iv) amends the current provisions on unauthorised credit card transactions; and
(v) clarifies the LSB’s role in monitoring compliance with UK Cards Best Practice Guidelines, where these are applicable to the Lending Code, and other changes including amendments to the current provisions on unauthorised credit card transactions.
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