Responsible lending key, regulator insists

7 September 2007

All banks and building societies must demonstrate responsible lending to their customers, a representative for the Banking Code has claimed.

According to the banking regulatory service, high street banks and building societies signed up to the code must demonstrate commitment to lend money in a fair way.

The voluntary code, followed by banks and building societies, emphasises the importance of building good relations with customers in the UK, treating people "sympathetically and positively" in cases of financial difficulty.

According to Credit Action, the average household debt including mortgages in the UK currently stands at £56,000, with the average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans had risen to £4,515 per average UK adult at the end of July 2007.

Adrian Lloyd, a spokesperson for the Banking Code, said: "Under the Banking Code there is a commitment for all the banks and building societies that are signed up to it to demonstrate responsible lending. What the code actually says is: 'We will assess whether we feel you will be able to repay the borrowing.'

"If things do go wrong and people get into financial difficulties then our code also says quite a lot about how to handle cases of financial difficulties under the general heading that people must be treated sympathetically and positively."

Credit Action figures show Britain's personal debt is increasing by £1 million every four minutes.

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