Posts Tagged ‘Lending Code’

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 5: mental health, information recording

November 12, 2009

176. With a customer’s explicit consent and in line with requirements of the Data Protection Act, where it is possible and appropriate subscribers should record relevant information about the customer on their account so that staff can deal appropriately with the customer.  [Reproduced with the kind permission of the British Banking Association -see link below]

As happens so often with different advances in civilised behaviour there is some conflict between different needs. I doubt whether, in this situation, there is a great problem between ensuring there is adequate information on file, and observation of data protection and privacy.

What is perhaps more interesting and important is both how that information is flagged, and how staff are trained to respond to it.

There is already a very intrusive approach to personal information gathering by creditor staff. Financial and health information, addresses, phones, relationships and family are all demanded as of right with little more confidence given the debtor than a rather loose code requirement and the Data Protection Act.

While there will be great annoyance and publicity at any breaches, we already know how much disc-stored information is either hacked or stolen and sold on. We have no real assurance about staff filtering or training, and even less about the policies and their implementation by creditors.

These considerations are multiplied where we find also that on transfer to a debt collection organisation the creditor is under no obligation to transfer important information, and a whole new – and potentially even less secure storage system – is made free to request and store all that information again.

So I urge on the BBA and the Lending Standards Board, as well as the OFT and the FSA to give great thought to the care which is needed in this, the procedures and requirements for the creditor and all agents, and the idea that it is right, as a routine, to expect debtors to repeat their information when it is already on file.

All that said, the addition of this is a support for the intent of the section, and is to be applauded.

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

 

New Lending Code 4:mental health, third parties

November 11, 2009
175. Where it is appropriate and with a customer’s consent, subscribers should work with advice agencies and health and social care professionals in a joined-up way to exchange information and ensure an effective dialogue. [Reproduced with the kind permission of the British Banking Association -see link below]

Many creditors, and some debt collectors, may well prefer to work with representative agencies. Always much easier to work to a routine and have someone else work out the details, and do all the questioning and examining.

Especially if that intermediary, that third party, because of its own pressures, needs to pigeonhole and classify elements of the debtors finances and problems.

Often this is presented as a requirement. To my mind this is disgraceful, and a breach of the terms under the defunct Banking Code, the new Lending Code and under the Consumer Protection Regulations.

Of course this third party representation can work sometimes for the debtor. But many cases have unique elements that are quite difficult to satisfactorily understand, let alone resolve.

For that reason among many others, such as the individual’s rights in a democracy, it is important that the right to represent oneself is again emphasised.

By implication the institutions are told that they are dealing with an individual, and that individual will decide whether to use an intermediary or not.

Notice also the reference to a ‘joined up way’ and ‘effective dialogue’. One hopes this is more effective that Tony Blair’s joined up government. But putting that humour aside, it does mean that the obligation is on the creditor to ensure proper collection of information and making inclusive judgement after all the to and fro discussion.

Creditors are also, by implication, required to inform themselves on mental health issues. This is why a specialist department for the vulnerable cases is not just a good idea, but sound practice. The creation of such departments should be treated both as a matter of urgency, and enforced by the OFT.

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

New Lending Code 3: mental health, responses

November 10, 2009
174. The appropriate response will differ in each case and could involve a range of approaches, including:
• working positively with an advice agency
• promptly carrying out agreed actions
• being flexible in responding to offers or schedules of repayment
• sensitively managing communications with the customer (for example preventing unnecessary and unwelcome mailings). [Reproduced with the kind permission of the British Banking Association -see link below]

 

Paragraph 174 has some useful pointers to the creditor on how to handle its dealings with vulnerable debtors.

These terms: ‘positively … promptly … flexible … sensitively’ give a clear indication of the manner in which companies should gear these particular contacts. This is in sharp contrast to the normally aggressive and harassing manner of most debt collection departments and debt collection agencies.

Sensitive in the context of this matter is defined as finely aware of the attitudes and feelings of others [The Penguin English Dictionary].

While I suggest the companies rethink their whole collection procedures in light of this advice, it will be a big advance if they do so at least for the vulnerable. Since the Consumer Protection Regulations already feature the idea of differences of approach to vulnerable consumers, there is now no excuse for creditors not making this policy for their internal procedures.

Those who prefer to handle their own affairs should note that the use of advice agencies remains an option, not a requirement. While the specialist charities do know their own fields, and offer more awareness, you should be careful about the awareness of any intermediary over your own situation.

Never allow yourself to be harassed over this by agents. Remember it is not your job to make the companies’ lives easier, but to get fair treatment – and to yourself behave fairly!

If companies fail to show this level of care in a case of mental health disorder they should be reported to the monitoring agency – The Lending Standards Board. If you feel the matter is serious I suggest you also report it to the Licences Section of the Office of Fair Trading.

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

How Will the New Lending Code take effect?

November 9, 2009

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

 

New Lending Code 2: mental health, systems

November 6, 2009

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

November 5, 2009

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

November 4, 2009

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
http://www.controlyourdebtcrisis.co.uk

Lending Code Arrogance

November 2, 2009

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