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Updated Lending Code provides new rights and protections for borrowers
The FLA Lending Code, which has been protecting borrowers for twenty years, has been relaunched today with a range of new protections for borrowers in financial difficulty, and new rights for users of store cards and short-term credit.
The Code is binding on all fifty FLA members in the consumer credit markets, and is subject to independent oversight. It includes a customer complaint service.
The Code has been updated to take account of recent changes in statutory regulation, including the new Consumer Credit Directive and the latest Office of Fair Trading Guidance.
It covers in detail all the key consumer credit markets and is now available in a new web-based format.
Key new elements include:
- Additional measures to help customers in financial difficulty and in particular those with mental health problems.
- A ban on commission payments for shop staff selling store cards, and a delay in discounts or other benefits for the first seven days after a store card is acquired;
- A requirement on lenders to ensure customers are aware of the total cost of a short-term loan (including fees and charges) before they apply, and that the loan is not suitable for long-term borrowing;
- A restriction on the number of times a short-term loan can be extended to a maximum of three, coupled with a requirement that a new credit assessment be carried out each time.
Fiona Hoyle, Head of Consumer Finance at the FLA, said:
"The FLA Lending Code has been providing additional protection for credit customers for over twenty years. The new measures for store card sales and short-term loans reinforce the commitment of all FLA members to responsible lending."
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Notes to Editors
- The Finance & Leasing Association (FLA) is the UK’s leading trade association for the consumer credit, motor finance and business asset finance sectors. Our members include banks, subsidiaries of banks and building societies, the finance arms of leading retailers and manufacturing companies, and a range of independent lenders of all sizes and types. They provide a range of products, including credit and store cards, unsecured loans, second charge mortgages, store instalment credit and motor loans.
- Last year FLA members provided £73 billion of new finance to UK businesses and households. £52 billion of this was in the form of consumer credit, a third of all unsecured lending in the UK. And £19 billion of it supported the purchase of new and used cars, including more than half of private new car registrations in 2011.
- The Government is working with financial services trade associations on additional standards for short-term lenders, to be included in Codes of Practice. The new version of the FLA’s Lending Code now includes these additional standards.
- In November last year store card providers agreed with the Government a package of additional protections for customers. These measures are incorporated in the new Code and will be fully implemented by March 2012.
- In preparing the new Code, the FLA consulted a wide range of stakeholders, including consumer representative groups, regulators and government departments.
For further media information, please contact:
Russell Hamblin-Boone, FLA
T: 020 7420 9656 E: russell.hamblin-boone@fla.org.uk M: 07810 374110
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993