Banking Code will not end age discrimination

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The banks have rejected the suggestion that age discrimination should not be permitted when deciding whether to lend money to an individual.

Under a review of the Banking Code - a set of voluntary guidelines put in place to protect consumers - it was argued that using age as a determining factor in choosing whether to approve lending should be abolished.

But the official response from the British Bankers Association (BBA) reveals that the proposal is unlikely to be adopted.

In creating the shortlist of recommendations, independent reviewer Mike Young was appointed to sift through the written submissions - a total of 50 of which were received - and establish a list of the main issues raised.

Among the 30 points he raised was the aspect of age discrimination - which he explains is of growing importance in light of an increase in the number of elderly Britons.

Mr Young comments that the proposal "recognises that there is an increasingly aging population - often with reasonable retirement incomes - and that they should not be discriminated against simply on the grounds of their age".

As such, he recommends that "the guidance should be amended to ban credit rejection simply on the grounds of reaching a certain age".

However, in its response to the proposals, the BBA claims that age can be a factor in determining whether a banking customer is likely to be a sensible candidate for borrowing.

"It is legitimate for a subscriber [to the Banking Code] to determine whether it offers credit to customers based on their ability to repay," the industry body observes.

For older applicants, the organisation contends that a consideration of the term of the lending and the age of the borrower might play a part in deciding whether offering the funds would be the best option for the lender.

But the review of the code has come under criticism from consumer bodies, including the independent Financial Services Consumer Panel (FSCP) and Citizens Advice.

John Howard, chair of the FSCP, comments that "there are still many areas where the code could go further".

He notes that Mr Young says the proposed reforms were accepted "in one form or another" by the banks, but argues that those forms may not be sufficient.

And Citizens Advice suggests that other areas of the code could also benefit from improvements.

Director of public policy Teresa Perchard expresses disappointment that both Mr Young and the banking industry did not take the opportunity to outlaw unsolicited increases in credit limits and target the issuing of credit card cheques.

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