Code of practice

Consumer Credit Trade Association Code of Practice

1 THE ASSOCIATION AND THIS CODE
1.1 The Association represents finance houses, retailers, building societies, credit-brokers, professional firms, debt collection companies and others acting in providing credit, hire and leasing facilities and ancillary services to consumers and businesses.
1.2  The purpose of this Code is to ensure compliance by members with the minimum standards set by the Association.
1.3 The Association and its members shall publicise the existence of this Code and where appropriate provide details of the Complaints Procedure.

2 MONITORING AND COMPLIANCE
2.1 The Association, through its Council, shall monitor the compliance of members with the Code and will require members to compile an annual statement of compliance as a condition of membership of the Association.
2.2  Members shall promptly notify the Chief Executive or other officer nominated by the Council, of any matters which might adversely affect the reputation of the consumer credit industry or of the Association.
2.3 The Association, through its Council, may take action against any member found to be in breach of this Code. Such action may include visits, written warnings to the member, requests for written explanations and meetings to discuss the matter. The ultimate sanction which the Association may impose is the suspension or expulsion of a member from the Association.

3 GENERAL OBLIGATIONS: OBLIGATIONS OF MEMBERS WHICH APPLY IN ALL CIRCUMSTANCES
Members shall:
3.1  Conduct their business lawfully, comply with all relevant legislation, judicial decisions and general rulings of regulatory authorities.
3.2  Trade honestly, responsibly, ethically and treat customers fairly
3.3   Behave at all times with integrity and endeavour to ensure that credit-brokers, suppliers of goods and services financed by the member and all other persons with whom the member has commercial relationships do likewise.
3.4  Act responsibly and with care in the day-to-day conduct of their business.
3.5  Not knowingly misrepresent facts to a customer concerning any aspect of a credit, hire or lease transaction. Members shall also take all reasonable steps to ensure that brokers, suppliers and any other intermediaries, when acting as agents of the member, do not misrepresent facts regarding such transactions to a customer.
3.6  Respect confidential information supplied to them in the course of their business.
3.7  Ensure that credit, hire or leasing documentation embodies all the express terms and conditions of the agreement which affect the customer’s obligations.
3.8  Where appropriate, restrict the period of the agreement to the life of the asset financed.
3.9  Provide adequate training for members of their staff, bringing this Code and the principles contained in it to their attention and requiring them to carry out their duties in accordance with it.
3.10 Comply with obligations and any conditions which may be imposed by the Office of Fair Trading with regard to their respective licences under the Consumer Credit Act 1974.
3.11 Follow, where applicable, any requests conveyed by the Association and emanating from the Bank of England, the Office of Fair Trading, the Financial Services Authority (or other relevant authority), and the enforcement authorities.
3.12 Follow where applicable any guidance notes issued by the Association which refer to this section of the Code.
3.13 Ensure that their agreements (and any related agreements), the manner in which they enforce their agreements, their dealings with individuals (whether consumers or business customers) and anything done or not done by or on behalf of the member (either before or after the making of the agreement or any related agreement), do not give rise to unfair relationships between the member, as creditor, and the individual, as debtor, under the Consumer Credit Act 1974.

4 CONSUMER TRANSACTIONS
4.1  Advertising and Marketing
4.1.1 Members shall not use direct mail indiscriminately, shall act responsibly and prudently in their advertising and marketing and ensure that ail their advertising is truthful and not misleading.
4.1.2 Members shall ensure that all advertising and promotional literature is fair and reasonable, does not contain misleading information and complies with all relevant legislation and, in particular, the provisions of the Consumer Credit Act 1974 relating to the marketing of credit to minors.
4.1.3 Members shall ensure that all advertising complies with the British Code of Advertising, Sales Promotion and Direct Marketing, the Radio Advertising Standards Code, the Television Advertising Standards Code, OFCOM and other relevant codes of practice of similar standing.
4.1.4 Members shall not engage in high pressure selling or other sales aggressive practices.
4.2  Responsible Lending
4.2.1 Members shall engage in responsible lending. Members shall grant credit, hire or leasing facilities on the basis of credit scoring or other assessment or evaluation of the customers’ ability to borrower hire, and the ability to repay.
4.2.2 Before granting credit, hire or lease facilities, members shall take all reasonable steps to satisfy themselves as to the customer’s ability to repay, for example by searching a credit reference agency to discover the existing commitments of the customer.
4.2.3 Members shall take particular care in relation to applications for credit from young people.
4.2.4 Members shall continuously monitor their credit granting practices and their assessment techniques to ensure that they are prudent and realistic in the prevailing economic circumstances. They shall not be less rigorous in assessing the customer’s ability to repay by reason of the sole fact that security is offered.
4.2.5 To the extent that they use credit scoring techniques, members shall abide by the principles set out in the publication “Guide to Credit Scoring 2000″, as subsequently amended or updated. Where members do not use credit scoring techniques they should be prepared to make clear to a declined applicant whether or not a refusal relates to a credit reference agency report.
4.2.6 Members shall ensure that where a customer is refused credit and believes the refusal to be unreasonable the customer is given the name or title of a senior official who will review the application.
4.2.7 Members shall have due regard to any Guidelines issued by the Office of Fair Trading or other competent authority relating to the grant of credit, hire or leasing facilities to non-status or sub-prime customers.
4.2.8 Members shall provide appropriate assistance, in the form of information and guidance, to vulnerable customers.
4.3  The Regulated Agreement – Credit and Hire
4.3.1 Members shall use plain and intelligible English in all agreements, pre-contract information documents and communications with customers. Members shall use prescribed wording where that is required by law.
4.3.2 Members shall ensure that their agreements (and any related agreements) with consumers do not contain unfair contract terms.
4.3.3 Members shall tell customers the interest rates applicable to their accounts and agreements for credit, the basis on which other charges are calculated and when they will be charged.
4.3.4 Where members vary interest rates they shall publish those variations by notices in their branches, if any, or in the press, or direct to those customers affected and in any event, as required by law. The need to publish does not apply to agreements under which interest rates vary in accordance with a published rate not under the control of the member.
4.3.5 Members shall tell customers how any variation of the other terms and conditions of their agreement will be notified and shall give customers reasonable notice before any variation takes effect.
4.3.6 Members shall comply promptly with all statutory and other reasonable requests by customers for information about their agreements and accounts.
4.3.7 Members shall supply copies of documentation and statements of account (the latter being provided in an easily intelligible form) as required by law.
4.3.8 Members shall comply with their legal obligations in relation to the provision of information and cancellation rights in respect of distance contracts.
4.3.9 Members shall assist customers seeking advice and guidance.
4.4     Matters arising during the course of the Agreement
4.4.1 Members shall comply with their legal obligations in relation to the issue of statutory notices, statements of account and settlement statements.
4.4.2 Statutory notices, statements of account and settlement statements shall be clear and in plain, intelligible English.

5 HIGH NET WORTH DEBTORS AND HIRERS
5.1   Agreements with high net worth debtors and hirers where members enter into credit, hire or leasing agreements with high net worth debtors or hirers they shall:
(a)comply with all the obligations of members under this Code, except for those which relate specifically to regulated agreements under the Consumer Credit Act 1974
(b)comply specifically with sections 3.13 and 4.3.2 of this Code.

6 BUSINESS TRANSACTIONS
6.1     Agreements for business use
Where members enter into credit, hire or leasing agreements with an individual (debtor or hirer respectively), wholly or predominantly for the purposes of a business carried on or intended to be carried on by the individual (including a partnership of not more than three persons) and the credit amount or amount of requisite hire payments exceeds £25,000, they shall:
(a)     comply with all the obligations of members under this Code, except for those which relate specifically to regulated agreements under the Consumer Credit Act 1974
(b)     comply specifically with section 3.13 of this Code.

7 GENERAL INSURANCE
7.1   Selling insurance a member offering general insurance, non-investment life assurance, payment or credit protection insurance or GAP insurance shall:
(a)be an appointed representative or other authorised person under the Financial Services and Markets Act 2000
(b)comply with all obligations under that Act and Rules in the FSA Handbook and specifically the “Insurance: New Conduct of Business Sourcebook (ICOBS)n
(c) ensure adequate disclosure of insurance policy features and exclusions
(d)ensure policy documents are sent to customers.

8 GUARANTEES AND OTHER SECURITY
8.1   Duty of care to guarantors members shall advise individuals proposing to give a guarantee or other security for a customer’s liability that
(a)by giving the guarantee or security he or she might become liable instead of or as well as that customer
(b)he or she should seek independent legal advice before entering into the guarantee or security.
8.2   Members shall be deemed to have complied with the requirements of 8.1 where guarantees and other securities contain a clear and prominent notice to the above effect.

9 SUPPLIERS OF GOODS AND SERVICES
9.1   Members’ obligations in respect of suppliers
9.1.1 Members shall encourage suppliers of goods and services financed under arrangements with them to:
(a)maintain high standards of quality, workmanship and service
(b)observe and participate in appropriate codes of practice which include provision for the prohibition of high pressure selling and the discouragement of oppressive and intrusive methods of canvassing.
9.1.2 Clause 11.2.3 shall apply equally to suppliers. Members should in appropriate circumstances consider reporting an unsatisfactory supplier to a relevant trade association.

10 PROVISIONS APPLICABLE TO SPECIFIC PRODUCT TYPES
10.1 Credit Cards
10.1.1 In addition to the requirements in relation to regulated agreements set out in section 4.3 above, members shall:
(a)tell customers the time it normally takes for a transaction to appear on their account and how frequently they can expect a statement
(b)furnish customers with a “Summary Box” relating to the financial details applying to the account furnish customers with a “Summary Box” relating to the financial details applying to credit-card cheques, where these are made available under the account.
10.1.2 Members shall:
(a) issue cards to customers only when they have been requested in writing or to replace or renew cards that have already been issued.
(b)tel customers if a card issued by them has more than one function
(c) comply with requests from customers not to issue Personal Identification Numbers (PlNs) where customers do not wish to use the functions operated by a PIN
(d)give customers the opportunity to say that they do not wish to receive credit-card cheques. 10.1.3 Members shall issue PINs separately from cards and shall notify the PIN only
to the customer.
10.1.4 Members shall tell customers of their responsibility to take care of their cards and PINs in order to prevent fraud. They shall emphasise to customers that
(a)they should not allow anyone else to use their card and PIN
(b)they should take all reasonable steps to keep the card safe and the PIN secret at all times
(c) they should never write the PIN on the card or on anything usually kept with it
(d)they should never write the PIN down without making a reasonable attempt to disguise it. 10.1.5 Members shall:
(a) inform customers, that they must tell them as soon as reasonably practicable after they find that:
· their card has been lost or stolen
· someone else knows their PIN
· their account includes an item which seems to be wrong.
(b)tell their customers, and shall remind them at regular intervals on their statement or by other means, of the name, address and telephone number of the person to whom they must give the details of a lost or stolen card at anytime, day or night
(c) act on telephone notification, but members may ask customers also to confirm in writing any details given by telephone
(d)on request, inform customers whether they accept notification of loss or theft of a card from card notification organisations
(e)on being advised of a loss, theft or possible misuse of a card or that the PIN has become known to someone else, take action to prevent further use of the card,
10.1.6 (a) members shall bear the full losses arising from the use of a credit-card:
· in the event of misuse when the card has not been received by the customer
· in respect of transactions not authorised by the customer after the member has been told that the card has been lost or stolen or that someone else knows or may know the PIN (subject to paragraph (d) below)
· if faults have occurred in the machines, or other systems used, which cause customers to suffer direct loss, unless the fault was obvious or advised by a message or notice on display
· in connection with a ‘distance contract` (other than an ‘excepted contract’).
(b)members’ liability shall be limited to amounts wrongly charged to customers accounts and any interest on those amounts
(c) customers’ liability for transactions not authorised by them shall be limited to a maximum of £50 or such other amount as may be prescribed by law) in the event of misuse before the card issuer has been notified that a card has been lost or stolen or that someone else knows the PIN (subject to paragraph (d) below)
(d)customers shall be held liable for all losses if they have acted fraudulently. They may be held liable for all loss if they have acted with gross negligence
(e) in case of disputed transactions, the burden of providing fraud or gross negligence or that a card has been received by a customer, will lie with the member. In such cases, members will expect customers to cooperate fully with them in their investigations.

10.1.7 Members shall provide customers with statements of account at intervals and containing information as prescribed by law.
10.2 Store Cards
10.2.1 in addition to the provisions applying to credit cards (where applicable) as set out in section 10.1, members shall abide by the legal requirements applying to store cards as set out in the Store Cards Market investigation Order of 27 July 2006.
10.3 Pre-paid Cards or Electronic Purses
10.3.1 Members offering pre-paid cards or electronic purses shall abide by the provisions which apply to them under the Financial Services and Markets Act 2000, regulations under that Act and Rules in the FSA Handbook.
10,4 Mortgages
10.4.1 The Consumer Credit Act 1974 members offering mortgages governed by the Consumer Credit Act 1974 (basically second legal mortgages and all equitable mortgages) shall comply with the Consumer Credit Act 1974, regulations under that Act, relevant codes of practice and this Code insofar as it is compatible with the foregoing.
10.4.2 Regulated Mortgage Contracts members offering regulated mortgage contracts (basically first legal mortgages on residential property), including equity release mortgages, lifetime mortgages, home reversion plans and home purchase plans, shall comply with the Financial Services and Markets Act 2000, regulations under that Act, the FSA Handbook; the Mortgages Conduct of Business Sourcebook, relevant codes of practice and this Code insofar as it is compatible with the foregoing.
10.4.3 Other mortgages members offering other types of mortgage, including exempt mortgages under the Consumer Credit Act 1974 shall comply with relevant laws, codes of practice and this Code insofar as it is compatible with the foregoing.

11 BROKERS
11.1 Members who are credit-brokers
11.1.1 Credit-brokers shall be licensed under the Consumer Credit Act 1974
11.1.2 Credit-brokers shall comply with the Consumer Credit Act 1974, regulations under that Act, relevant codes of practice and this Code insofar as it is compatible with the foregoing
11.2 Members’ Obligations in respect of Credit-Brokers
11.2.1 Members shall not impose any pressure on the customer to enter into an agreement which the customer may find difficult to repay according to reasonable credit granting criteria. They shall also take reasonable steps to ensure that any credit-broker from whom they accept business does not impose any such pressure.
11.2.2 Before accepting business from a credit-broker for the first time, a member shall check that the credit-broker is properly licensed under the Consumer Credit Act 1974 and where the member intends to accept a flow of business from the credit-broker, the member shall:
(a)carry out such enquiries as may be reasonably necessary to satisfy the member of the integrity and competence of the credit-broker
(b)bring the principles of this Code to the credit-broker’s attention.
11.2.3 Members shall monitor generally the activities of credit-brokers from whom they accept business and in particular:
(a) take all reasonable steps to ensure that such credit-brokers act in accordance with the principles of this Code and in particular do not:
(i) persuade or permit customers to sign blank application forms
(ii)encourage or knowingly permit customers to provide false or misleading information.
(b)decline to accept further business where a credit-broker falls below the requisite standards of integrity and competence or fails to comply with the applicable provisions of this Code after they have been brought to the credit-broker’s attention and, in such circumstances, consider reporting to the OFT the credit-broker’s failure to observe proper standards
(c) report to the Association any relevant criminal conviction of a credit-broker of which the member becomes aware.
11.3 Members’ Obligations in respect of Insurance Brokers
11.3.1 Before accepting business, including an introduction, from any insurance broker for the first time, members shall:
(a)ensure that the broker is an appointed representative or other authorised person under the Financial Services and Markets Act 2000
(b)bring the principles of this Code to the insurance broker’s attention.
11.3.2 Members shall monitor generally the activities of insurance brokers from whom they accept business.
11.3.3 Members shall refuse to deal with an insurance broker who fails to act honestly or in accordance with the principles of this Code.

12 DEBT COLLECTION AGENCIES
12.1 Debt collection agencies shall be licensed under the Consumer Credit Act 1974
12.2 Debt collection agencies shall comply with the Consumer Credit Act 1974, regulations under that Act, relevant codes of practice, debt collection guidance issued by the Office of Fair Trading and this Code insofar as it is compatible with the foregoing.

13 DATA PROTECTION AND CONFIDENTIALITY OF CUSTOMER INFORMATION
13.1 Members shall respect personal information supplied to them by customers and shall inform customers of the purposes for which this information is intended to be used and disclosed, before it is given by the customer.
13.2 Where a banker-customer relationship exists members shall observe a strict duty of confidentiality about their customers’ (and former customers’) personal financial affairs and shall not disclose details of customers’ accounts or their names and addresses to any third party, except for the purposes of filing with credit reference agencies and in the following cases:
(a)where they are legally compelled to do so
(b)where there is a duty to the public to disclose
(c) where the interests of the member require disclosure
(d)where disclosure is made at the request, or with the consent, of the customer members shall not use exception (c) above to justify the disclosure for marketing purposes of details of customers’ accounts or their names and addresses to any third party, including other companies within the same group.
13.3 Members who use the services of credit reference agencies and/or fraud prevention agencies shall ensure that any information they supply about customers and the conduct of their accounts to credit reference agencies and/or fraud prevention agencies is complete and accurate.
13.4 Members shall at all times comply with the Data Protection Act 1998 when obtaining and processing customers’ personal data and shall explain to their customers that they have the right of access, under that Act, to their personal records held on computer files.13.5 Members shall advise customers of their right not to receive marketing information from the member or a third party with whom the member is connected. Members shall comply in that regard with the requirements of the Data Protection Act 1998 and the Privacy and Electronic Communications (EC Directive) Regulations 2003,

14 DEALING WITH CUSTOMERS EXPERIENCING FINANCIAL DIFFICULTIES
14.1 Members shall ensure, by regularly examining their debt collection procedures and those of any third parties they employ, that they conform to high ethical standards and allow for proper consideration of the customer’s circumstances and in particular:
(a) encourage customers in financial difficulties to inform them of their difficulties at the earliest possible moment (and members will endeavour to respond sympathetically, without prejudice to members’ rights)
(b)provide in all relevant correspondence the name or title of a specially trained member of staff who may be contacted if difficulties arise
(c) take into consideration, before determining whether to enforce an agreement, all information supplied by the customer or otherwise in relation to the cause of any default and the customer’s future ability to repay. if the customer has disclosed multiple debt problems, members shall inform the customer of the availability of advisory services.
14.2 Members shall, where appropriate, refer customers to debt counselling organisations and notify customers where they can get free advice, such as Citizens Advice Bureaux, Money Advice Centres, National Debtline, the Consumer Credit Counselling Service or Consumer Direct. Members will work with debt counselling organisations to assist their customers.
14.3 Members shall have due regard to the Debt Collection Guidance issued by the Office of Fair Trading and in particular shall not engage in any unfair business practices identified in that Guidance.
14.4 If a member passes a customer’s account to another person to collect overdue payments, such as a debt collector or solicitor, it will inform the customer. Members will always choose debt collection firms which agree to abide by the Credit Services Association Code or OFT Debt Collection Guidelines.

15 COMPLAINTS PROCEDURE
15.1 General
15.1.1 Members shall deal promptly and at an appropriate management level with complaints. Members shall establish a complaints procedure and furnish information on request about their complaints procedure. Customers shall be told what further steps are available if they believe that their complaint has not been dealt with satisfactorily by the member, including ultimate resort to the Financial Ombudsman Service,
15.2 Customer Complaints
The following shall apply to complaints made by customers to the Association in relation to customer transactions.
15.2.1 If a customer makes a complaint to the Association in relation to an account or an agreement with a member, the Association shall, in the first instance, refer the complaint to a senior executive of the member, for consideration.
15.2.2 If the complaint is not resolved to the customer’s satisfaction, unless the customer wishes to refer the complaint to the Financial Ombudsman Service, the Association (through an appropriate representative) shall endeavour to conciliate between the customer and the member and to restore communication between the customer and the member where this has broken down. The Association shall accept for conciliation complaints made against members and subsidiary companies of members.
15.2.3 Nothing in this Code restricts or is intended to restrict the rights of a customer or a member to pursue remedies through the courts.
15.2A The conciliation procedure shall not be invoked where a customer’s complaint has already been considered under the dispute resolution procedure of another Code of Practice or of the Financial Ombudsman Service, or has been the subject of a judicial decision.
15.2.5 Members shall notify customers of their complaints procedure, including the customer’s right to seek resolution of the complaint under the Association’s conciliation procedure and the Financial Ombudsman Service.

16 PREVENTION OF FRAUD AND MONEY LAUNDERING
16.1 Members shall satisfy themselves about the identity of a person seeking to enter into an agreement or to open an account to assist in protecting their customers, members of the public and themselves against fraud and money laundering.
16.2 Members shall establish, maintain and implementfraud prevention and anti-money laundering procedures and client identification procedures and train their staff in operating such procedures.
16.3 Members shall comply with all relevant legislation and guidance relating to the prevention of fraud, money laundering and client identification including relevant Money Laundering Regulations and guidance issued by The Joint Money Laundering Steering Group.

17 INTERPRETATION
In this Code reference to Acts or Regulations shall be construed as such Acts or Regulations respectively, as amended or re-enacted from time to time.

18 FORMAL PROCEDURES
18.1 The Council may make such changes to this Code as it may consider appropriate from time to time, by a majority of the members of the Council present and voting. In the event of an equality of votes the Chairman of the Council shall have a casting vote in addition to the vote to which he is entitled as a member of the Council.
18.2 The Council shall give members at least 30 days’ notice in writing of any changes to this Code.