What is the Lending Code?
This is a self-regulatory code which sets minimum standards of good practice when dealing with the following customers in the UK:
- Micro-enterprises (a micro-enterprise is defined as a business that employs fewer than 10 persons and has a turnover or annual balance sheet that does not exceed €2 million).
- Charities with an annual income of less than £1 million.
It provides standards of good lending practice to follow when dealing with:
- Credit cards
- Charge cards, and
- Current account overdrafts.
The Code does not apply to merchant services, non-business borrowing secured on land, or to sales finance.
The Code came into effect 1st November 2009. With the revised version coming into effect on 1st April 2011.
The Code contains a promise to treat customers fairly and reasonably. The promise is supported by seven key commitments as well as the standards set out in the rest of the Code.
The key commitments are a summary of the main areas covered in the Code and are shown below:
- Subscribers will make sure that advertising and promotional literature is fair, clear and not misleading and that customers are given clear information about products and services
- Customers will be given clear information about products and services before, during and after the point of sale, including how they work, their terms and conditions and the interest rates and charges that apply to them
- Regular statements will be made available to customers (if appropriate). Customers will also be informed about changes to the interest rates, charges or terms and conditions
- Subscribers will lend money responsibly
- Subscribers will deal quickly and sympathetically with things that go wrong and act sympathetically and positively when considering a customer’s financial difficulties
- Personal information will be treated as private and confidential, and subscribers will provide secure and reliable banking and payment systems
- Subscribers will make sure that their staff are trained to put this Code into practice.
Who are the Lending Standards Board (“LSB”)?
The LSB are the regulators who ensure that subscribers adhere to the Code. They continually monitor Code adherence through mystery shopping exercises, themed visits, and by analysing responses to the Annual Statement of Compliance. The Annual Statement of Compliance is a self certification exercise which all subscribers must undertake on annual basis, to confirm their firm’s positioning in respect of compliance with the Code.
Their address and contact numbers are:
Lending Standards Board
40 Basinghall Street
Tel: 0207 012 0085^
Website address: www.lendingstandardsboard.org.uk
Please view a copy of the Lending Code
For further advice, the following documents are available to download through the Lending Standards Board website:
- A guide to the Lending Code for consumers (PDF)
- A guide to the Lending Code for micro-enterprises (PDF)
For sources of free independent money advice for micro-enterprise’s please view the list of approved sources for advice on the BBA website.
For advice and information on how banks set the price for loans to small business please view the online guide for small business lending bankfacts on the BBA website.
Code Compliance Officer
We are required by the Lending Standards Board to appoint a Code Compliance Officer. The Code Compliance Officer and Deputy Code Compliance Officer reside in The Co-operative Bank p.l.c. Compliance and are responsible for liaison with the LSB, co-ordination of regulatory visits and cascade of relevant Code requirements to the business areas. Any enquiries should be addressed to Louis Petherick, Code Compliance Officer, The Co-operative Bank p.l.c., Compliance Department, P.O. Box 101, 1 Balloon Street, Manchester, M60 4EP.