The LSB has identified new opportunities to strengthen customer protections with practical guidance for banks and lenders.
This follows an industry-wide consultation and draws on its own compliance and research findings. The LSB will enhance its guidance on digital journeys and how SMEs apply for or access financial products online. It also aims to help banks and lenders improve the processes and procedures they have in place to support businesses and entrepreneurs with specific or unique needs.
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Outcomes-focused, FCA recognised
The LSB claims that its business Standards set the benchmark for best practice in lending to UK SMEs with a turnover of up to £25m. Furthermore, it says it provides the only protections of their kind across the lifecycle of lending products. The Standards are outcomes-focused, recognised by the FCA and apply to approximately £120bn of UK business lending.
Overall, the consultation found the Standards continue to provide a good level of protection for SMEs. But it identifies areas of further work for the LSB to take forward.
These include developing further guidance to support firms’ application of the business Standards across digital channels. This is to ensure that business customers receive the appropriate support regardless of how they access financial services.
In addition, the LSB aims to update its guidance to support firms offering sustainable products and services. This is timely as the regulatory approach to green finance continues to evolve.
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By GlobalDataIt also plans to enhance guidance on personal guarantees. It has identified isolated instances where processes for reviewing guarantees could be working more effectively. This is to ensure lenders’ information remains current, particularly where lending is repaid or there are changes at director level. Further guidance on declined applications is also planned.
LSB to issue guidance to lenders to promote inclusion
The LSB will ensure lenders consider a broad range of SMEs’ circumstances and needs throughout product design and approval stages.
Laura Mahoney, LSB head of policy and legal said: “SMEs are the backbone of the UK economy. It is vital that they have the same access to fair outcomes when using financial products that consumers enjoy. The LSB’s pioneering business Standards play a key role in ensuring this happens and protecting SMEs from harm.
“The financial services industry is dynamic and constantly evolving. Keeping our Standards under review is critical to ensuring they continue to uphold our commitment to fairness and excellence in customer outcomes for businesses. This consultation evaluated emerging areas in business lending, such as the use of digital channels to deliver lending products and green finance, to ensure the Standards reflect, and are responsive to the changing economic and business environment. We’re also building on our groundbreaking work on financial inclusion, to make sure businesses get the support they need regardless of their owners’ backgrounds or specific needs.”
