Banks, building societies and other lenders have a commitment under the Banking Code to ensure that they lend money responsibly, according to a spokesperson for the Banking Code.
Commenting on the measure which could help people avoid debt management problems, Adrian Lloyd said that those signed up to the code are required to demonstrate responsible lending practices.
“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,” Mr Lloyd said.
He added that the code is designed to assess whether people will be able to clear debt they take on from lenders: “What the code actually says is: ‘We will assess whether we feel you will be able to repay the borrowing’.”
Mr Lloyd also pointed out that sub-prime lenders are governed by the same roles if they are signed up to the Banking Code, which first emerged in 1992 as a form of protection for consumers.
Finally, he added that cases involving financial difficulties – perhaps where people cannot become debt free – must be handled “sympathetically and positively”, according to the code.