A new lending code is coming into force on 1 November.
Also, independent body, Lending Standards Board will oversee the operation of new industry standards – the Lending Code – which outlines the relationship between lenders and borrowers.
The Code covers the credit and debt elements of the old Banking Code, other parts of which will be covered through the introduction of Financial Service Authority regulation of deposit taking.
The Lending Code covers good practice in relation to unsecured loans, lending aspects of credit cards and charge cards and current account overdrafts.
The new Lending Code includes rules which apply to credit assessment and the use of credit reference agencies and the risk based pricing principles for credit cards.
It also includes rules over financial difficulties, debt collection and helping customers in debt who have a mental health condition.
Robert Skinner, chief executive of the Lending Standards Board, said: “The Lending Standards Board will ensure that the new Lending Code strengthens the protection customers will have when borrowing. It will independently monitor and enforce the Code and take action where lenders fall short of the Code’s standards.””
