Codes of practice
Many creditors have their own codes of practice. For example, all gas and electricity suppliers must have a code of practice on dealing with customers in financial difficulty. Other creditors subscribe to trade associations, which have codes of practice with which members should comply – eg, the Finance and Leasing Association Lending Code, the Credit Services Association Code of Practice and the Lending Standards Board’s The Standards of Lending Practice.
Some regulators (eg, the FCA, Ofwat and Ofgem) issue guidelines on how to deal with customers in debt.
All of these codes set high standards, which creditors and collectors are expected to meet in their dealings with clients. The Standards of Lending Practice also requires subscribers to ensure that when they sell a debt, the purchaser agrees to comply with its guidance on handling financial difficulties. The Finance and Leasing Association Lending Code contains equivalent provisions. Although creditors and collectors often fall short of the standards set in the relevant code of practice, they are voluntary and cannot be directly enforced in the event of non-compliance. The only remedy is a complaint, which in some cases can be referred to an independent ombudsman
This Handbook refers to codes of practice where relevant. It is often in a client’s best interests to point out to a creditor or collector where there is non-compliance with a code of practice and request that it be complied with. In the case of collectors (and private enforcement agents), it is also worth copying in the creditor where the collector is collecting a debt on behalf of a creditor. This does not mean that a complaint should be made in every case. The aim of a complaint should be to achieve a better outcome for the client than currently appears likely and so, if a complaint is likely to impede rather than promote negotiation, you should discuss this with the client and consider deferring it.