Under the new Standards of Lending Practice, registered firms will focus on achieving good outcomes for their customers at every stage of the process, from advertising products and customer applications through to the closure of an account. The Standards give firms flexibility on how to achieve the desired outcomes, allowing them to innovate and maximise the benefits of new business models for the good of consumers.
The Standards for personal customers will become effective on 1 October, with the existing Lending Code remaining in force until then.
Sponsored by two industry trade bodies – the UK Cards Association and the BBA – the Standards will continue to be overseen by the independent Lending Standards Board.
Lending to small businesses
The Standards represent a base for future development as the major lenders have plans to widen coverage into new areas.
Work has already started on the Standards of Lending Practice for business lending, extending to firms with an annual turnover of up to £6.5 million, significantly above the scope of the current Lending Code which covers just micro-enterprises.
This is expected to be launched in early 2017. Further releases will follow as the products covered by the Standards are widened.