Registered Firms are regulated by the Financial Conduct Authority (FCA) and will already be required to adhere to the Consumer Credit Sourcebook (CONC).For completeness, the Standards of Lending Practice also include where relevant, references to CONC and the Consumer Credit Act 1974, as amended (CCA).The Standards of Lending Practice are voluntary and set the benchmark for good lending practice in the UK, outlining the way Registered Firms are expected to deal with their customers throughout the entire product life cycle.The Standards of Lending Practice, which replace the Lending Code, are composed of seven main areas.
If customer fraud is suspected; the burden of proof is on the firm to prove this is the case. Firms should inform customers of any changes to the interest rates and fees on their overdraft.Each section contains both a ‘customer outcome’ and an overall statement of how a Firm will achieve this; both are supported by a more detailed set of standards to enable Firms to demonstrate how they achieve the desired outcome.While a number of these areas are well established within Firms, there are some newer, emerging areas where the Standards of Lending Practice help Firms in developing their approach to these.Firms will achieve this: with systems and controls that are capable of identifying and subsequently, supporting customers in financial difficulty.Firms should be able to demonstrate that a sympathetic and positive approach has been applied when considering a customer’s financial situation. Firms should have triggers and processes in place to identify customers who may be in financial difficulty and should act promptly and efficiently to address the situation with the customer. Customers identified as being in financial difficulty should be provided with clear information setting out the support available to them and should not be subject to harassment or undue pressure when discussing their problems. Firms should demonstrate an empathetic approach to the customer’s situation; listening to and acting upon information provided by the customer with a view to developing an affordable and appropriate solution. If an offer of repayment is made via the common financial statement/standard financial statement, this should be used as the basis for pro-rata distribution amongst creditors covered by the plan. Firms should have appropriate policies and procedures in place to identify and support vulnerable customers where this impacts on their ability to pay. Customers who are in financial difficulty will, where appropriate, be signposted to free, impartial debt advice. Firms should apply an appropriate level of forbearance, where, after having made contact with the customer, it is clear that this would be appropriate for their situation. Where a customer remains engaged with the Firm and maintains their repayment plan, they will not be subject to unnecessary contact. Firms should consider freezing or reducing interest and charges when a customer is in financial difficulty. All communication with the customer/their authorised third party will be undertaken in a clear and open manner, via the customer’s/third party’s preferred method of communication (where this is known, appropriate and available). Firms should take into account the customer’s circumstances and consider whether it would amount to a fair customer outcome to pursue, or to continue to pursue, the amount owed. Firms should follow a robust due diligence process when selecting third parties for debt collection or when selling a debt. Firms should ensure that when a customer’s debt is sold, the purchaser continues to apply the relevant protections provided by the Standards of Lending Practice.
Search for intimidating customers:
Firms will achieve this: with systems and controls at product design, financial promotion and product review stages that assess product performance and ensure product information is clear, fair and not misleading. Firms should ensure that all financial promotions, across all channels, are clear, fair and not misleading.