OPT OUTs in New Lending Code

[Amethyst]

BBA - The voice of banking and financial services - Media - Article - New Lending Code Provides Improved Protection For Borrowers

Key recommendations being adopted include:

• Stronger requirements for responsible credit assessment
• New provisions on customers’ ability to opt-out from unarranged overdrafts
• More support for customers who may be in, or approaching financial difficulties
• Extension of the Code’s temporary breathing space moratorium on debt collection to customers using ‘self-help’
• New standards on the appropriate use of the Right of Set-Off
• Further assistance for customers in financial difficulty who have a mental health condition

The independent reviewer, Professor Lorne Crerar, has now completed his review of the Lending Code.

Click here to see a copy of his report.

Click here to see a copy of the response from the Lending Code Sponsors indicating the changes that will be included in the new edition of the Code.

Click here to view the press release regarding the outcome of the review.

A new edition of the Code will be introduced at the end of March.


Themed Review of compliance with The Lending Code's provisions on dealing with unauthorised Credit Card transactions

In February 2011 the LSB completed a review of compliance with The Lending Code's provisions on dealing with unauthorised Credit Card transactions

Click here to view report

[Amethyst]

Re: New Lending Code

Okay Opt-out is being added in July

31. The reviewer recommends that the Code adopts the work carried out between the industry and
OFT to devise new standards for accounts that offer customers the ability to opt out of having
access to an unarranged overdraft facility. This work also included the development of new best
practice standards for dealing with customers in financial difficulty, including as a result of
unarranged overdraft charges [31]. We accept the reviewer’s recommendation and will
incorporate these new initiatives in the Code, with implementation required by July 1st 2011.

and 14 days notice before taking charges, but when they are ready

36. The Lending Code currently requires that customers are given at least 14 days pre-notification
before interest in taken for the provision of an overdraft. The reviewer recommends that this
Code provision should also apply to overdraft charges [37]. We agree that the reviewer’s
recommendation should apply to arranged and unarranged overdraft charges for personal
customers and to arranged overdraft charges for micro-enterprises. We will therefore amend the
Code to require that customers are given at least 14 days pre-notification before overdraft
interest and charges are taken in these circumstances. Appropriate implementation periods will
be agreed for those lenders not yet able to provide this prenotification

Mental Health has a big section paras 71 -78 of http://www.lendingstandardsboard.org...Codereview.pdf

[Amethyst]

Re: New Lending Code

Glad they accepted the allowing people to sort out debt before waiting for default and sending them to collections depts.

68. The reviewer recommends that the Code encourage subscribers to consider a CFS if it is
submitted by a customer who believes that they are heading into financial difficulties and would
like to arrange a repayment plan before they enter arrears [87]. As outlined at paragraph 48, we
are happy to amend the Code to clarify that a customer’s representations, including presentation
of a CFS, should be considered by the subscriber if the customer is seeking to work with them to
manage impending financial difficulties.

[Amethyst]

Re: New Lending Code

The reviewer recommends that a new provision is added to the Code to prohibit subscribers from initiating court proceedings in relation to a debt, if the credit product is already subject to a complaint by the customer to the Financial Ombudsman Service (FOS) [103].

However...

83. However, we are mindful of the potential for a new provision in the Code to be mis-used by some
customers and/or their advisors to avoid legitimate court proceedings being undertaken. This
could result in frivolous complaints being lodged with the Ombudsman to the detriment of
genuine complainants. We are therefore unable to accept a recommendation for a new Code
requirement, but have reminded subscribers of their obligations to treat customers fairly when
taking formal recovery procedures.

tsk they are so cynical !

[Amethyst]

Re: New Lending Code

Umm well if I keep picking out interesting bits I'll end up pasting the whole thing on here....so last bit

79. The independent reviewer recommends that if a subscriber passes or sells a customer’s debt to
a collections agency, the subscriber should inform the customer of the subscriber’s intention prior
to moving the debt [99]. We accept the reviewer’s recommendation, but believe it should apply to
all customers. We will therefore amend the Code to require that customers are always prenotified
of where the debt is being passed to.

[EXC]

Re: New Lending Code

''It has been suggested that an unarranged overdraft facility should be available on an “optin”
as opposed to “opt-out” basis and that it should be compulsory for all accounts. I will not
be recommending that this is considered for inclusion. Extensive work has already been
carried out by the LSB and switching to an “opt-in” would, in my opinion, not improve the
standards that have been compiled.''

[Amethyst]

Re: New Lending Code

Wonder who could have suggested that then lol. Robert did say it was a no go from the start so it isn't suprising, but still a bit annoying.

[EXC]

Re: New Lending Code

The press release has 3 glowing quotes about the new lending code by the BBA, BSA & UK Cards Association....and not one from a consumer group or even independent source.

[Amethyst]

Re: OPT OUTs in New Lending Code

lol would you expect one. It's public relations rather than information really - I think its hard to make proper comments until we have the text of the actual lending code to be implemented. But will be interesting to see what the various usual commentators have to say about it today.

[EXC]

Re: OPT OUTs in New Lending Code

lol would you expect one. It's public relations rather than information really

The problem is that it's supposed to be an independent review but they're confining quotes from just industry.

I wonder how the OFT guidance on not enforcing debts on disputed accounts stands now that the code allows for court action while a complaint is with the FOS? Should we ask the OFT?

[Amethyst]

Re: OPT OUTs in New Lending Code

OFT 664

Not sure. I think that covers genuinely (reasonably) disputed debts whether with the ombudsman or in house.. If a clause went in specifically saying if the case is with the ombudsman they can't take action then it would be so easy for people to quickly get a dispute however minor in to the ombudsman to stave off action and it would put pressure on the ombudsman. Nothing like to the degree which they suggest.

Trouble with the 'reasonably' disputed part is the lenders definition of reasonable is entirely different to the consumers and if the FOS part had been included at least it would have been definitive.

I think as it wasn't in the lending code before (about FOS) and it isn't going in now, there isn't a clash with 664, the danger I suppose with this 'decisions' document is could lenders see it as having the go ahead to take enforcement action whilst disputes are with the FOS ?

By 'disputed' we mean genuinely disputed. We are not seeking to protect 'won’t pays' but
those who are being pursued for a debt they do not owe or genuinely believe they do not
owe. Debt collectors who can show that the debt is due and that any dispute has been
looked into and the debt confirmed will not be in breach of this provision

[EXC]

Re: OPT OUTs in New Lending Code

I think that you could argue that if your complaint has been accepted for consideration by the FOS (and not deemed frivolous and rejected from the outset , as the FOS does) then that should be the benchmark in consideration of what is a reasonable complaint.

[EXC]

Re: OPT OUTs in New Lending Code

''Under our rules, we don’t charge a firm a case fee if we consider a complaint against them is "frivolous and vexatious" – we simply dismiss the complaint without considering its merits.''

ask ombudsman news - your questions answered

[leclerc]

Re: OPT OUTs in New Lending Code

"There are two main constraints on my review. Firstly, on competition grounds, I cannot make
recommendations which would restrict the ability of individual firms to set their own prices or which would otherwise restrict competition. Secondly, I have to weigh up the costs and benefits of each change. "


Love the preamble

[leclerc]

Re: OPT OUTs in New Lending Code

"During the consultation stage, I have been advised by the BBA and LSB that industry agreement has been made to produce two Consumer Facing Documents, one for personal customers and the other for micro-enterprises. Both versions should be available in hard copy and in a PDF version online for customers. It is my understanding that the LSB, in conjunction with the BBA, will draft these documents based upon the intentions already referenced. "

I bet they didn't consult on this one