New rights for people in debt

By Matthew Plant

When people borrow money, they need protection - rights that'll help them stay on top of their debts.

So it's good to see the launch of an updated Lending Code that'll be binding on all 50 FLA (Finance & Leasing Association) members in the consumer credit markets. Last year, those members provided £73 billion of new finance to businesses and individuals in the UK, so these changes should make a difference in a lot of cases.

The FLA Lending Code has been in existence for 20 years, but the updates will give people in debt new rights and new protections. The most important bits include:

• A ban on any commission paid to shop staff who sell store cards.
• New measures designed to help people who are in financial difficulties -particularly people with mental health problems.
• A new rule that short-term loans can only be extended three times at most - and that a fresh credit assessment will have to be conducted each time.
• Lenders will have to make sure that would-be borrowers know how much a short-term loan will cost in total (including charges and fees). They'll also have to tell them that this kind of loan isn't appropriate for long-term borrowing.

The Code updates take recent changes in statutory regulation into account - such as the latest Office of Fair Trading (OFT) Guidance and the new Consumer Credit Directive.

Image © iStockPhotos

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Tags: debt, FLA, Finance and Leasing Association, Office of Fair Trading, OFT

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