Posts Tagged ‘financial difficulties’

New Lending Code 12 – Financial difficulties section.

November 24, 2009

 It has undoubtedly strengthened the content of the new Lending Code to put the previous guidelines into the body of code. In this section it has not only been incorporated, but the order and groupings have been made more logical.There have been some changes that limit the extent to which debtors were supposed to comply, and this is wise. I don’t think it removes the duty on a debtor to behave responsibly, but since few debtors will see or read the code before falling into arrears it makes no sense to appear to place an obligation on them in the code itself.There are nearly 50 paragraphs altogether in this part and, if they are enforced well, make a good basis for negotiation.Most interesting of all, perhaps, is the inclusion of a paragraph on treatment of micro-enterprise borrowers. I shall discuss this next time, and then cover the parts of the financial difficulties’ section, before describing the rest of the code.Joseph Harris – Debt Control Man

Author: Control Your Debt Crisis on Your Own Terms

http:www.controlyourdebtcrisis.co.uk

 

New Lending Code 7: mental health, time allowance

November 17, 2009

178. If a customer informs a subscriber that they have a mental health problem that is impacting on their ability to manage their financial difficulties, the subscriber should allow the customer a reasonable period (e.g. 28 days) of time to collect and submit relevant evidence to the subscriber. This evidence will help the subscriber to work with the customer,
advice agencies and health/social professionals where appropriate to determine the most appropriate action to deal with the customer’s financial difficulties. [Reproduced with the kind permission of the British Banking Association -see link below]

How one can be both happy and unhappy with  a provision at the same time!

The idea that vulnerable debtors need more time is made very plain by this paragraph, and leaves  debtors with no excuse for placing unreasonable time limits on them.

But the example of time is not realistic.

Bearing in mind that most debtors with problems are able to quickly arrange a new schedule with their creditors, and the number who have to take time or make explanations is relatively small, there is no real reason for hurry in this kind of case.

Indeed the use of harassing techniques is a costly piece of unkind futility.

In the normal course of events 28 days is not unreasonable for provision of detail information. Often debtors are lucky  to have routine responses from creditors in less time.

Unless there is good reason to act otherwise, I always advise that debtors should insist of communication by letter. There are many advantages, which I discuss in my book, and for some – and for many on occasion – the very act of putting something in writing, or collecting it together, is a difficult and slow process.

To a creditor this can look like deliberate procrastination; a strong reason this paragraph is so valuable. Only a specialist staff can actually understand – and it will take experience for them to do so fully – why there is nothing suspicious in delay in some conditions.

But even with these problems many people will want to manage their own affairs. So there is not easy fix of turning all these cases to intermediaries. Indeed, with the best will in the world, intermediaries can be just as lacking in understanding. And they can be too pressured to spend the time that is needs to represent properly.

So, while calling for the training of specialist staff to be a requirement, I welcome this contribution to a better experience for vulnerable debtors.

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

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18