More Protection For Unsecured Loan Customers
Following the problems which have been caused by the credit crunch and irresponsible lending and borrowing over the course of the past few years, there is to be a new code of conduct for banks and other loan companies to follow, in addition to any new regulation which is to be introduced by the Financial Services Authority (FSA).
The Lending Code is to be introduced by the independent group, the Lending Standards Board and is designed to offer a higher level of protection for those individuals taking out new unsecured loans, credit cards, charge cards and overdraft facilities.
Although home owner loans, mortgages and secured loans are to be covered under the mortgage market review conducted by the FSA, there is very little protection at the moment for borrowers taking out unsecured loans and credit cards and the new lending code is aimed at providing the additional protection for people taking out new unsecured loans as well as those facing financial problems on any existing loans or credit cards they may already have.
The new lending code contains rules which govern the initial assessment of credit when applying for a loan along with the use of credit reference agencies. It will also look at how credit card companies decide on the cost and interest rates applicable to their cards, as well as offering more help and protection for those borrowers who find themselves in financial difficulty with their loans and those who may be suffering from mental health issues and have loan debts they are unable to manage.
Robert Skinner of the Lending Standards Board said “The Lending Standards Board will ensure that the new lending code strengthens the protection customers will have when borrowing. It will independently monitor and enforce the code and take action where lenders fall short of the code’s standards.”
