Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Lending Code launched for credit cards and loans

New code replaces credit elements of Banking Code

Consumers borrowing money are now covered by the new Lending Code, which came into effect at the beginning of November.

The Lending Code replaces those aspects of the Banking Code covering borrowing and sets rules that lenders must follow when providing overdrafts, credit cards, charge cards and loans to personal and small business customers.

Lending Standards Board

The Code will be enforced by the Lending Standards Board and includes requirements covering:

  • credit assessment and the use of credit reference agencies
  • risk-based pricing principles for credit cards
  • financial difficulties and debt collection
  • helping customers in debt who have a mental health condition

Robert Skinner, chief executive of the Lending Standards Board, said: ‘The Lending Code sets out what it means to be a responsible lender covering both credit assessment and the support that will be available if things go wrong. It will be followed by all significant providers of credit products who currently subscribe to the Banking Codes.’

The new provisions came into effect on 1 November when responsibility for the non-lending aspects of the Banking Codes moved to the FSA. For more details, read Which?’s analysis of the FSA’s new responsibilities.

Who is covered by the Lending Code?

The Code protects the following customers when they borrow money:

  • A consumer
  • A micro-enterprise. A micro-enterprise is a business that employs fewer than 10 people and has a turnover or annual balance sheet that does not exceed £2 million
  • A charity which has and annual income of less than £1 million

The Lending Code contains detailed notes on how customers should be dealt with through the whole product life cycle, from marketing and account opening to the provision of information on changes to terms and conditions and interest rates. Protection is also included to help when something goes wrong, including when someone is experiencing financial difficulties.

The Lending Standards Board

The Lending Standards Board (LSB) is the successor to the Banking Code Standards Board and begins its work today, 2 November 2009.

The LSB has a number of key objectives:

  • To assist firms to interpret and meet the requirements of the Lending Code
  • To monitor and enforce compliance with the Code and take disciplinary action for material breaches
  • To identify any gaps and deficiencies in the Code that could lead to consumer detriment and to advocate change

Britain Needs Better Banks campaign

To join Which? in campaigning for better banks, log onto our special Britain Needs Better Banks website, and sign our online petition. 

Don’t forget you can ensure you get the best deal from your bank on current accounts, personal loans and credit cards by regularly checking our Which? Best Buys and using our free online advice guides.

pound coins

Which? Money when you need it

You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.

Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.

Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast

For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.

Back to top