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
http://www.controlyourdebtcrisis.co.uk

 

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