The introduction of the new lending code

Since the UK economy went downhill and the borrowers started feeling enormous financial pressure, which led to the increase in the number of loan arrears and defaults, the UK loan industry has been trying to come up with effective ways to support borrowers.

On the 31st of March the UK loan market was informed about an updated lending code, which provides better protection for borrowers, charities and small businesses.

The co-sponsors of the new code are BBA, BSA, and the UK Cards Association.

The code must be applied to all new personal loan and credit card operations and is meant to provide people with loan arrears and defaults with better support and to help prevent borrowers from getting into more debt.

The new code is the result of an independent review of the loan industry carried out by Professor Lorne Crerar.

The measures recommened according to the new lending code are the following: a stricter requirement for a more thorough credit assessment on an individual applying for a loan, more help and support for borrowers who are about to get into financial trouble or are already experiencing hard times, more ability for people to opt out of costly unarranged overdraft facilities, and more breathing space for people who are trying to cope with their financial difficulties.

The basic points of the new lending code are going to be let known to all individuals taking out a new loan or other credit agreement.
 


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