How Will the New Lending Code take effect?

One can probably trace the genesis of the new Lending Code, from FSA bombshell about taking over the Banking Code, to realising parts belonged under the OFT, to realising that means rewrites, to thinking the best people to write it would be the current possessors, to conveying that information and then to actually confirming.

Only after that could the British Banking Association deal with the severe truncation of its code and the Lending Standards Board, as the prior Banking Code Standards Board is now known, start reorganising.

It was a severe disappoinment to me that he result of this meant the code was not ready for examination and comment long before it came into effect. Indeed it was not in sight until the moment of becoming The Code.

So it is no surprise to any of us if understanding how the changes in it will be worked is not yet extant.

In my discussions with the FSA, the BBA and the OFT – I have not attempted to ask the FOS yet – I have asked the following questions and made the following points.

1. How will the mental health section, pars 173-183, which is entirely new and very important for affected debtors, apply to existing cases

2. It seems likely that a court would interpret its application to an existing collection at any point of change; but what would be the relevant criteria for ‘change’?

3. Where a complaint has reached final response and is then either on its way to or with the FOS how does the FOS utilise pars 173 to 183. There are many ways to do this, including returning the complaint to the creditor or agent with instructions to reconsider it in light of the new pars.

4. In par 183 reference is made to the MALG advice of 2007 as further guidelines, virtually bringing the whole of them in to the code. These are about all vulnerable debtors ]probably including borrowers whether in financial difficulties or not. As this ties in firmly to the CPRs on vulnerable customers, adding a definition in part, to what extent are all vulnerable debtors assisted by the new paragraphs.

5. As the OFT is the enforcing agency, the FOS, and all debtors and their advisors, will need to know your position on them. Will you advise when the necessary advice is issued, and give details of that advice?

I would point out that the creditors, as large and powerful institutions and with various industry bodies, lobby intensively both on legislation, rules and codes, as well as interpretations. While there are seriously over-stretched charities who represent debtors they either do not specialise or are not big enough to offer a strong countering voice in this area.

6. The voice of the actual debtor is simply not heard and his lobby is weak. Even the ombudsman, the FOS, is actually funded by the industry, and its influence is very clear in process.

7. Through the credit licences the OFT has considerable power to ensure better observance of rules and a more balanced judgement by the FOS; yet from the debtor’s point of view that power is used very lightly.

8. The OFT is the body upon which the debtor must rely to make sure the rules there are effective. This is a matter I will return to.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
www.controlyourdebtcrisis.co.uk

 

New Lending Code 2: mental health, systems

Debt and mental health
This section of guidance is relevant to both personal and micro-enterprise customers.
173. The impacts of financial difficulty can be especially acute for customers with mental health problems. Subscribers should consider their processes and systems to ensure that they can be responsive to a customer in financial difficulties, from the point at which they are made aware of a mental health problem. [Reproduced with the kind permission of the British Banking Association - here]

The Lending Code is now part of the formal equipment of the Office of Fair Trading, and sits more certainly side by side with holding of Credit Licences and with such fair dealings rules as the Consumer Protection Regulations.

Monitoring remains with the Lending Standards Board [that was the Banking Code Standards Board], but penalising becomes a matter for the OFT.

This is why this is such an important advance. It is now a requirement for creditors and debt collectors to take into account mental problems where there are financial difficulties. This is already covered in the CPRs, under the guise of vulnerable debtors. Vulnerable includes the elderly and those without funds.

While the Debt and Mental Health section is by no means as definite as I would like, it is such a big strengthening of the position of debtors with such health problem that the wording is to be praised as improving the experience of such debtors.

By featuring the good practice guidelines of the Money Advice Liaison Group, the other members of the vulnerable classification are effectively included. The more definite advice in the guidelines also becomes part of good practice.

It is also worth glancing at the 2005 comments of the Treasury Select Committee.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

New Lending Code 1: Lending, Debt and the Vulnerable

At the end of section 9, Financial Difficulties, there are eleven paragraphs headed ‘Debt and mental health’.

Inclusion of this is a huge departure from the previous section 14 of the Banking Code [most of which is now wrapped up in the FSA BCOBS]. It is about time this recognition of the vulnerable started, since the Treasury Select Committee was urging it in 2005 and the Money Advice Trust [a charity supported by the industry] in 2007, the two previous reviews of the code.

As the Lending Code includes guidance on treatment of micro enterprises this applies to these as well as personal customers. Fortunately the right of customers to represent themselves is not challenged here. As with debtors we have indeed moved a long way in understanding since the nineteenth century.

While this in no way puts the MAT or Treasury advice as part of the code, there is an instruction to British Banking Association members to take note of the guidelines published by MAT on behalf of the Money Advice Liaison Group, which is a forum with representatives from all parts of the finance industry, charities and government sections concerned.

While the more negative admission that the Lending Standards Board [new name for the Banking Code Standards Board] will neither monitor nor enforce them, the expectation of observance is clear and of value.

This is excellent news for vulnerable debtors, the mental health charities, the advisors and plain common sense.

Still a-ways to go for the full laying out of how to treat all vulnerable customers, but a welcome and cheering start. Such understanding bodes well for all debtors and all borrowers; perhaps paradoxically for all creditors as well.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

New Lending Code Overview

I am not used to eating my words, but this may be the occasion. Fortunately the matter is one that has not just my approval, but is a demand of mine.

The new code has taken on board the advice of the MALG forum on mental health issues and debt. For me this makes the new version a cause for celebration.

Because it is rather hidden away my first glance did not take it in. But the lay out of the pdf of The Lending Code is, in fact, very well designed and does make it easier than usual to find one’s way about.

So congratulations Paul Ross, who is in charge of the code for the British Banking Association. This is a success.

Make the most of this praise , there is unlikely to be any more!

I need time to evaluate the content, of course. I will have to take some pretty small bites and chew hard, so there is no option but to write many blogs to give you the information you need.

Next blog will look carefully at the entries on the mental health advice to creditors, and I will try to give a good overview followed by detailed discussion of the effects of the different paragraphs.

But this inclusion has certainly cheered me.

Of course I do take credit for its inclusion. Don’t laugh.

When I spoke to Paul Ross on the phone I July I did try to impress on him how important it was, and that the information needed had been published by the Money Advice Trust in the 2007 review of the Banking Code. the impression I got from him was that there was no way he would include it.

I wrote on this to him in July also. Either he was pulling my leg, which I doubt, or I did spark his thinking. And after investigation I suspect he came to the same conclusion Idid about its importance.

Well that’s my story, and I’m sticking to it . Here is part of my email on July 22:

“In this I am particularly conscious of the MALG advice in 2007 – and the BBA is a member of MALG – that seems to have simply fallen by the wayside. This dealt particularly with the problems of vulnerable debtors. While the major part of the industry does seems sensitive to this anyway, there are some big players that appear not to appreciate the responsibility on them for fairness in these areas.

“I also appreciate the main thrust may be to ensure the new wording equates to the old, but it might be a useful move for the BBA to indicate at least the new broad heads to enable early thought by the multiple users of the code regarding the changes they will all have to make in their references.

“November 1 is very near in practical terms, only three months away. Any early information on the change would be much appreciated by all users.”

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis On Your Own Terms
www.controlyourdebtcrisis.co.uk

Speedy Members of Parliament

I said yesterday I would write to give some self-therapy. And this is it and is, as stated, about MPs.

Now I have no idea what MPs think. In their favour I do know they are asked to deal with a large voter caseload in their constituencies, play a part in the proceedings of the House, both on the floor and in all the other deliberations and hearings, attend to their constituency organisations, give talks and speeches and specialise in various areas.

For some reason they also expect to be able to live a private life .

But I do expect them to give some sort of response to contact either from constituents or on their specialisation’s. And by that I mean even an acknowledgement would be nice.

Andy Love replied a fortnight ago, but only to say he had written to various of the people I had criticised. Karen Buck has taken action to defend debtors in a number of ways, and quite bravely in political terms. But answer to me came there none.

Alistair Darling – well he might be busy, but he has a staff that deal with such things; but no answer from him. George Osborne you might have thought ready to jump at the chance to find a stick to beat this government with – but no response to me.

My biggest disappointment is the man who I have great respect for his clarity and understanding of the financial mess; the man in Parliament who was explaining how Brown policies were heading us over the cliff edge. And doing that before it was mentioned by any but a few others. So what happened Vince Cable? Not even an ‘I’ll get back to you’.

Well, there, I’ve told on them all in the big kids playground. Next blog I start to describe its contents. And on second glance there could be a big surprise for me and for you.

And rather a good one.

If I can getaway with quoting a song that is before even my time:

The sun has got his hat on
So shout hip, hip, hooray…

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
www.controlyourdebtcrisis.co.uk

Tremble: The Power Shoulder Cometh

Dallas and Dynasty, old tv soap operas, competed in dramatising the worlds of the rich. Perhaps the biggest icon of them was Joan Collins in dresses [sorry gowns] with shoulder pads that almost defied parody.

It seems the shoulder pad is back. But not just the shoulder pad, but the Joan Collins knock-you-down version. Apparently pads are being stacked vertically or horizontally.

Extreme shoulders, I am told, take four in each shoulder. Such is the sudden take of the new look that one major store reports a sell out in all its stores!

The objective is to give confidence in the boardroom, or other workplace.

This ties in neatly with a report on women as entrepreneurs, and this is done by the Financial Times http://www.ft.com/cms/s/0/fcaaab2c-c7e2-11de-8ba8-00144feab49a.html in an article which refers to them as lipstick entrepreneurs.

I thought this might be disparaging, until I saw it was a co-production between Avon and the Federation of Small Business.

The report suggests the number of enterprises run by women could double in 10 years, to a total of 2 million. This includes the one person business to larger ones.

Increases in women on company boards and women millionaires are both forecast, as is the end of the glass ceiling. Almost as a redundancy the report points out the obvious that “…the workplace will become more female-friendly…”

Talking of redundancy this is also part of the switch of breadwinner. As more and more men are finding themselves first in the job-loss line, it rests with the lady of the house to start a business to keep that roof over their heads.

Unfortunately I cannot find a link to the report, nor find the name of the report – not even in the FT news story. Tut, tut. When I was a journalist…

Joseph Harris

Lending Code Arrogance

Since I wrote on this three weeks ago I have been trying to find the text of the new code. Only today have I managed to get hold of it, and it came into effect yesterday.

While my criticisms of Paul Ross, Retail Banking director of the British Bankers Association, still stand, I am happy to thank him for his prompt response today with the inclusion of the link. I needed that since the normal searches revealed nothing.

Click here for the pdf. But don’t expect it to be that easy! Clicking for the pdf here takes you to this link where the pdf link does get the actual document. To me this run-around is a further sign of the arrogance I now see as normal.

This means that no attempt has been made to make the new text, or its new wrapper, easy to find. Yet the actual text and the changes may have massive impact for debtors [as it may do for all who deal with the banks and financial institutions for credit services].

The contempt shown for debtors, for consumers and for their advisors matches the experience of dealing with the worst of the banks.

I will post a series of blogs describing the terms in the new document. At first glance they look like the old with new numbering. But putting effort into a comparison would delay the presentation to you and it might in any case be a good idea to remind ourselves of the obligations on bankers under this new version of parts of the old Banking Code.

My next blog will however be a further attempt to self-therapy to deal with the anger I feel over the run-around. I will speak of Members of Parliament.

Joseph Harris

Change, what change?

I’ve been around a bit in my life.

If I haven’t travelled the world, I have certainly travelled the work and non-work experience, as well as areas that few have to. I have been in politics, and out of it. I have been in journalism, and out of it. I have seen the financial, management and economic world at work. I have learned from uncomfortable and continued experience how wonderful our NHS and its dedicated people are.

I have done jobs near the ‘top’ and jobs near the ‘bottom’. I have met, worked with and helped and been helped by people at every level of society; and not helped by some all over the place too!

In that time I have seen a world in flux; from a post-WWII to a post-credit-crunch. Frankly, for all its deprivation and shortages, I think it was better half a century ago.

“But,” you will be shouting at me, “we have made progress. the internet and computer, the airplane travel and the food supply. Why even the clothing and housing is better; our cars, our supermarkets.

“It is not good enough yet, but even dealing with one’s debt problems is better!”

Of course it is. But is – that extraordinarily difficult thing to describe – life better?

Alright, tell me: how much direct contact with people do you have? People that are not your family or work friends? I mean face to face contact, socially and of concern for one another? And of concern about where you live, and how?

If you are a younger person how much interest do you take in your parents? How often do you see them, or contact them to check how they are? And if you are an older one, how much do you seek to advise your children?

Families: how often do you gather round a table for a meal and a chat?

And when did you last feel contented. Not contented with any specific; not happy or sad; not triumphant. But just able to be still and enjoy the world?

Even a century ago William Henry Davies [the poet of the tramps] had this to say about the ‘progress’ of the industrial revolution:

What is this life if, full of care,
We have no time to stand and stare?
…
No time to turn at beauty’s glance,
…
A poor life this if, full of care,
We have no time to stand and stare.

Because of the pressures on me, partly over the debt issue, I have not been able to keep up this blog very well, far less stand and stare . I am trying to rationalise how I do all this, so I am in the process of bringing the blog into my website and making the management of the whole far better.

Then I hope to write much more on the attempts to roll back all the advances made over treatment of debtors in recent years. Then, or at the same time, to prepare books of my poetry and write new poems. Then complete my book on how to create a better tomorrow. And then a few other things that I’d like to do.

Who knows, perhaps then I can just sit – or stand – and contemplate, well, just nothing; or at least nothing consequential.

Something to look forward to, anyway…

Joseph Harris

Lending Code secrecy ‘is a disgrace’

I have just released this press release; as you see it is a matter of some seriousness

The new Lending Code, which replaces the credit and financial difficulties sections of the defunct Banking Code, is due to come into effect on November 1. Some nineteen short days away.

There is to be no public sight of these changes, nor any consultation process before these changes come into effect.

Specialist author Joseph Harris – Debt Control Man – has been trying to get sight of these changes since June. He has been told they will not be released until they are in effect on November 1 by Paul Ross, the man who is writing the new document for the British Bankers Association, in an email.

“This is a clear case of dictatorial behaviour,” declares Mr Harris. “It is a disgrace that no one concerned with the field, nor any debtor – whether defaulting or not – has any idea how the changes will affect them.

“Vince Cable was wrong when he said Gordon Brown had changed from Stalin to Mr Bean. On the basis of this secrecy and undemocratic behaviour he remains Stalin.”

Phone calls and emails to the FSA and the OFT result in classic Civil Service dropping the query into the new virtual filing bin.

“Even though there are many rules to help debtors negotiate the treacherous waters of finding the best way for their needs, too many creditors and debt collectors – including the biggest companies – do their best to sidestep them.

“Lack of a clear knowledge of what is happening among debtors and their advisors leaves these worst companies a window of opportunity to harass and bully particularly the poorest and most vulnerable debtors,” adds Mr Harris, author of Control Your Debt Crisis on Your Own Terms http://www.controlyourdebtcrisis.co.uk/book-cydc/cydc_Book_intro.shtml .,

“It is also a tragedy that the opportunity to include the requests of the Treasury Select Committee in 2005 and of the Money Advice Liaison Group has been lost.”

While most of the Banking Code is being operated as statutory Code of Practice directly by the FSA, the credit and financial difficulties sections move to the The Office of Fair Trading to sit beside the OFT’s duties controlling issue of Consumer and Business Credit Licences.

Joseph Harris, Debt Control Man

Banking Code Changes Update

In trying to sort the changes out, particularly in how they affect defaulting debtors, I have been led a merry dance.

I think I have emailed or phoned or both, almost every player in this game of musical chairs.

Finally I remembered that the last time I needed to make sense of this area I got sense from the Banking Code Standards Board. So my thanks to them once again.

I have since spoken to others to try to get detail of how exactly the changes will take effect from November 1. That is pretty close for all those who will be affected, especially the helping organsiations like the CABs and Law Centres.

It seems that while most of the Banking Code disappears into the winding corridors of the Financial Services Authority, the parts dealing with lending move to the Office of Fair Trading – except they don’t.

The wording of the new Lending Code [possibly that is the title] is to be managed by the British Banking Association, which has always done it, and it will be monitored by the Standards Board, which has always done that!

And the OFT will, er, enforce fair treatment, and it has always done that!

So welcome to the new-old, different and unchanged system.

Well the changes have to be re-written, but it seems there will be little time for picking up any errors in wording or possible interpretation. And I understand nothing new will go in before 2011.

Not the advice of the Treasury Committee of 2005, nor that from the Money Advice Trust on behalf of MALG in 2007 – nor anyting else.

Well nothing of help to debtors, anyway.

Let you know what more comes to light.

Joseph Harris
Debt Control Man
www.controlyourdebtcrisis.co.uk