Money Advice Scotland Annual Conference & Exhibition 2016 Crieff Hydro, 2nd & 3rd June 2016

The Lending Code the next chapter Robert Skinner

Key conclusions and recommendations of review Professor Griggs concluded that The Lending Code in its current form and content cannot go forward as it is The industry should develop a new set of principles which would form the basis under which any code and best practice should sit The LSB and the Code sponsors should look at how duplication can be eliminated or reduced Recommendations A new Code should be structured along a customer journey and have clear separation between personal and business lending There is a case to extend the product scope of the Code for both personal and business lending Consideration should be given to extending the Code’s coverage beyond micro-enterprises to include small business customers

What has happened since? Group of senior executives from Subscribers and Mike O’Connor from StepChange developed set of Principles to provide framework for revised ‘code’ Confirmation that the new Principles and standards that support them should be independently monitored to provide assurance to all parties Work undertaken on format and detailed drafting of new personal Standards of Lending Practice Document drafted setting out what customers should expect from their lender and how they can support this Kick-off of work on new Standards for business lending New issues to be considered CMA Retail Banking market investigation Credit Card market study FCA Discussion paper on approach to SMEs Financial Services Trade Associations review

Standards of Lending Practice Principles Customer Outcomes Standards Practitioner ‘tool kit’ Mandatory

The Standards Financial promotions and communications Vulnerability Product sale Money management Account maintenance and servicing Financial difficulty Governance and oversight

Principle Registered firms will ensure that their customers: Will be supported if they anticipate, or a firm becomes aware, that they will have or are experiencing difficulty in repaying their borrowing So, how will this look in the new Standards of Lending Practice? There’s an overarching principle for firms to be supportive if they anticipate or becomes aware that customers will have or are experiencing, difficulty in repaying their borrowing.

Money Management Customer Outcome Customers will be helped with managing their finances through pro-active and reactive measures designed to identify signs of financial stress and to help them avoid falling into financial difficulty Beneath the overarching principles will be the standards of lending practice, broken down into a number of topics, one of which being money management. The each topic starts with an overarching customer outcome, which for money management requires firms to support customers at all points of the customer journey with proactive & reactive measures, such as those outlined I've outlined earlier.

Money Management Standard Firms should monitor customers’ credit card and overdraft limits to ensure that the customer is not exhibiting signs of financial stress and where relevant, offer appropriate support

Money Management Practitioners' ‘tool kit’

LSB Vision and Mission Our vision is that all personal and small business customers receive a fair deal from their lender. The role of the LSB is to help make this happen by: Monitoring the achievement of the Standards in a risk-based proportionate way Taking action where firms fail to achieve these Undertaking studies into areas of potential detriment and recommend new Standards where appropriate Working with firms to spread best practice

LSB Oversight Model New applications Risk assessment reviews Full assessment Practitioner support Workshops Oversight strategy Benchmarking Call calibration Advisory Mature Guidance Post-implementation reviews Progressive Standards development projects Research projects Immature Relationship management Management information Development Outcome testing Subscriber reviews Assurance

Working with others Consumer and debt advice bodies Regulators FOS Banking Standards Board Small business representative bodies Money Advice Service

Moving forward Target launch dates New personal Standards (release 1) Guidance New business lending Standards New LSB website New Standards can provide a platform for self-regulation to be put forward as a response to emerging concerns e.g. CCMS and CMA remedies and provide a vehicle to bring existing voluntary agreements within a monitoring regime

The Lending Code the next chapter Robert Skinner