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

2. The Lending Code the next chapter
Robert Skinner

3. 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

4. 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

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

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

7. 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.

8. 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.

9. 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

10. Money Management Practitioners' ‘tool kit’

11. 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

12. 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

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

14. 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

15. The Lending Code the next chapter
Robert Skinner