Under the new banking code introduced last month lenders are required to address the issue of responsible lending, with the British Banker Association (BBA) championing the changes.
The move to self-regulate the industry is indicative of a wider willingness to tackle the problems of rising debt, says BBA’s Joanna Elson.
“Changing the banking code is a regular cycle every three years when an independent expert consults and makes recommendations,” she explained.
“The banking code standards board found certain problems with lending,” she added.
“They found it was better to act now than wait.”
By self-regulating the banking industry says it can pre-empt legislation and avoid lengthy waits before crucial measures are enacted.
Irresponsible lending has become a major personal finance issue in recent years, highlighted by the snowballing level of cumulative debt nationally – which now stands at over £1 trillion.