Designed to improve banks’ responsibility towards customers experiencing financial difficulties, the guidelines have been implemented to quell the growing issues of debt, arrears and repossession.
As part of the move, banks will contact borrowers who are experiencing funding difficulties and will provide evidence of a shift towards more responsible lending, by looking at borrowers’ financial commitments and credit rating.
Angela Knight, chief executive of the BBA, suggested that the move had come as a result of borrower feedback and was aimed at improving confidence in the market.
She explained: “This new banking code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties.
"The long consultation process, now complete, has shown clearly what customers want and expect from their banks. That has been the driver for these changes.”
Graham Lund, deputy managing director at Callcredit, welcomed the proposals.
He commented: “Callcredit broadly welcomes these changes. Making lending more responsible means making better and quicker use of customer data.
"Traditionally, lenders run a credit check on a customer the day they accept their application – and then will often run monthly checks thereafter.”
However, Which? claimed that the proposals did not go far enough, and called for banks to raise the minimum level of credit card repayments.
