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Lending principles

We believe it is important for businesses to know how they should be properly treated by their bank and what they need to do during their relationship with their bank. Two sets of minimum standards have been created, which outline what you should expect. The Lending Code applies to personal and small business customers, whilst the Lending Principles have been created for larger business customers.

The Lending Code

The Lending Code is a self-regulatory code of practice which sets standards for financial institutions to follow when they are dealing with their individual or personal customers and micro-enterprise customers. It provides valuable protection for these customers and explains the standards they should expect day-to-day and in times of financial difficulty.

The Lending Code is sponsored by members of the British Bankers' Association, the Building Societies Association and the UK Cards Association.

It covers, loans, credit and charge cards, current account overdraft facilities but does not apply to merchant services, non-business borrowing secured on land or to sales finance.

The full Lending Code is available on the Lending Standards Board Website (PDF).

Key commitments to you
Lenders will act fairly and reasonably in all their dealings with you. They will make sure:

  • their advertising and promotional material is fair, clear and not misleading
  • they give you clear information about their products and services - how they work, their terms and conditions and the interest rates and charges that apply to them
  • you can bring your professional advisers with you to support you in your discussions with them
  • that if you ask, they will give you an in-house guide or industry-standard literature on the factors that determine how they set their prices
  • they will tell you how long it will take for them to make a lending decision, starting from the point when you give them the information needed to complete the application
  • they lend money responsibly
  • wherever practical, they will give you clear feedback when they have decided to decline (refuse) a request for credit, including what steps you might take next
  • they have a fair and effective appeals process in place to review decisions to decline a credit request
  • they tell you about your right to appeal if your application is declined
  • they give you regular statements and tell you about changes to interest rates, charges or the terms and conditions for your account
  • they deal quickly and sympathetically with things that go wrong
  • they act sympathetically and positively when considering your financial difficulties
  • your personal information is treated as private and confidential.

Lending code for Micro-Enterprises

A Guide to the Lending Code for Micro-Enterprises(PDF) explains the commitments which apply to businesses than employ fewer than 10 people and whose annual turnover or balance sheet do not exceed £2m euro.

Lending Principles for Larger Businesses

In addition to the Lending Code, the UK's five largest banks have developed a set of Lending Principles for Larger Businesses (PDF). These Principles apply to businesses with a turnover of less than £25 million but do not cover the smaller business segment, which is protected by the Lending Code.

The Lending Principles for Larger Businesses set out the minimum standards larger firms can expect when dealing with their banks.

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