In its latest Bulletin the Code Compliance Committee (CCC) which monitors compliance with the Mutual Banking Code of Practice by subscriber mutual credit unions and building societies has set out its priorities for future Code compliance monitoring activities and projects.
The CCC is currently developing its Annual Compliance Statement 2011 to assess Code compliance in general and the following areas in particular:
- Compliance monitoring and breach management
- Breach register
- Compliance training
The Committee will also monitor subscribers' implementation of recommendations in the following reports:
- Visibility and Access Report
- Direct Debit Report
- Report regarding compliance with part B of the Code
The CCC is concerned there may be potential areas of non-compliance with Clause 12 of the Code – Safeguards for loan guarantors.
In particular, compliance with the following sections are being reviewed:
- Clause 12.3 – which prohibits unlimited guarantees;
- Clause 12.6 – regarding the provision of key information to a guarantor relating to the borrower, including defaults, credit history and/or contract performance;
- Clause 12.9 – the application of the 24 hour period between the provision of guarantee documents and signing them, and
- Clause 12.11– signing of guarantee documents by the guarantor as a separate process and without the borrower present.
In addition to required documentation to be provided to guarantors e.g. final letter of offer and details of any security the MBCOP requires the credit provider to also provide guarantors with all the information available to them that, in their reasonable view, a careful and prudent guarantor might wish to consider regarding:
- The financial position of the borrower, and
- The borrower’s credit history for the previous 12 months (including details of notice of demand, defaults, overdrawn accounts or other evidence of borrower distress known to it).
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Posted 31st March 2011 by admin in Legal, Risk management