Responsible lending is looming as the key issue in the review of the Code of Banking Practice. The reviewer, Jan McClelland, is seeking responses to the issues paper from her review, published on Friday.McClelland wants the code to reflect principles rather than be too specific, due to the danger of it becoming out of date before the three-year time frame for review is up."In the British code and the Abacus code right up front there is a commitment to responsible lending, and then there is more about how they will go about it," McClelland said in an interview yesterday"I'm suggesting putting a commitment to responsible lending right up front in the overriding principles and then I'm suggesting some changes to the clause itself."At the moment it's grouped together with hardship, I think it warrants a separate stand alone clause and I also think it needs to be strengthened with reference to the relevant legislation and policies."McClelland said that: "I think hardship warrants its own section and I think it should be grouped with debt collection."I've put together a number of suggestions, but the real dilemma I have is that there is so much going on at the moment in this space, both at state and federal level."There's been the Productivity Commission review and the ministerial council is looking to put out a paper on responsible lending so if you have the code too specific then it can become out of date very quickly."So my preference is to have the code very principle-based, with pointers to the relevant legislation or the relevant standards that are applying at the time."The Law Reform Commission work into privacy legislation also has a lot of implications for the code.The issues paper makes a formalised role for financial counsellors in the hardship provisions of the code."I personally think that is important," McClelland said."Some other codes I looked at do include reference to financial counsellors - making it clear the role of the counsellor in engaging with the bank and negotiating things like repayment plans."There has been some discussion on this between the Australian Bankers Association and the consumer groups and given that the federal government and the NSW government have both just increased the amount going to the counsellors I think it warrants some discussion anyway."McClelland also wants more plain English, particularly in responsible lending clauses."People say to me, and I tend to agree, that the wording of the clause sounds a bit complex and legalistic."It talks about the 'the care of a diligent and prudent banker' which relates back to the legislation under which banks operate."However the British code and the Abacus code are expressed in more plain English so the issue is how do you make it user friendly for consumers and incorporate the legalistic requirements."Adding to the specific references to elderly and disabled customers, McClelland is suggesting bringing in reference to the needs of indigenous people, particularly those in remote communities.Jan McClelland is the former Director General of Education in NSW. Submissions on