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

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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
http://www.controlyourdebtcrisis.co.uk