One of just four industry codes formally recognised by the Financial Conduct Authority, the business Standards provided unique protections for many UK SMEs – lending to limited companies and business lending above £25,000 sits outside the FCA’s regulatory perimeter. The Standards were developed to recognise the fact that SMEs need tailored protections and should not be treated the same as personal banking customers.
The business Standards provided protections to SMEs with a consolidated turnover of up to £25m across loan, commercial mortgage, overdraft and credit card products. The LSB also oversaw a separate version of these Standards covering asset finance for SMEs.
Firms registered with the business Standards included high street lenders, digital-only banks, challenger banks, and dedicated SME lenders. The Standards set best practice for product information, product sale, declined applications, product execution, credit monitoring, the treatment of customers in financial difficulty, business support units, portfolio management, customers in vulnerable circumstances, and firms’ governance and oversight.
The personal Standards replaced the Lending Code, introducing a specific focus on consumers and pioneering an outcomes-focused approach to regulation. The development of the Standards was based on a recognition that a prescriptive rules-based approach to the treatment of customers, particularly those in financial difficulty or vulnerable circumstances, did not create the necessary incentive to drive firms to consider whether the actions taken to meeting the relevant rule were delivering the right customer outcome.
The Standards set best practice in relation to overdraft, credit card, charge card and unsecured loan products provided to consumers. They covered product and service design, product sale, account maintenance and servicing, money management, financial difficulty, vulnerable circumstances, and governance and oversight. They also incorporated remedies from the Financial Conduct Authority’s Credit Card Market Study. Registered firms spanned high street lenders, through to credit card providers.
The CRM Code pioneered a consistent approach to the prevention, detection and reimbursement of Authorised Push Payment (APP) fraud. By its last full year in operation, the Code covered over 90% of APP scams, had significantly improved reimbursement rates for victims, and improved the payments sector’s ability to detect and stop APP scam attempts. With the CRM Code in place, the rate of APP scam growth slowed then began to fall, while the amount of money lost to these scams declined 20% from its peak.
Customers covered by the Code were less likely to be scammed, likely to lose a smaller amount of money if they were scammed, and more likely to reimbursed for their losses. The CRM Code was wound down once the Payments Systems Regulator introduced a statutory scheme for mandatory APP fraud reimbursement. Unlike the CRM Code, the statutory scheme did not introduce requirements for prevention and detection.
A 2023 LSB report highlighted the unique barriers faced by ethnic minority-led businesses when seeking to engage with the financial services sector. Later LSB research found that ethnic minority-led businesses were less likely to be approved for the loans they’d applied for, and more likely to have had a reason to complain to a lender about their experiences.
To help the financial services sector deliver better outcomes for ethnic minority-led businesses, the LSB developed the Access to Financial Services for Ethnic Minority-led Businesses Code. The proposed Code represented a ground-breaking effort to build a new framework for improving customer outcomes, adopting a principles-based approach that supports innovation within the financial services sector while delivering real change for customers. The Code’s development and launch was paused with the wind-down of the LSB.
The Access to Banking Standard was designed to ensure that customers were better informed about a nearby branch closure and the reasons for it, and that they were made aware of the options they had locally to continue to access banking services, whether via alternative branches, a local Post Office, or other channels. It was designed to also ensure that specialist help and support was provided for those that needed it to access online or mobile banking services, or to explore other alternatives.
The Standard ensured that firms’ commitments on branch closures were adhered to and paved the way for statutory regulation in this area – provisions from the LSB’s Standard formed parts of the new FCA requirements on branch closures.
The successor to the Banking Code and Business Banking Code, the Lending Code set best practice for lending to consumers and micro-enterprises across registered financial services providers. The Code’s provisions applied to loans, credit cards and current account overdrafts, and covered the treatment of customers through the whole product lifestyle from marketing products and opening accounts, through to account maintenance, interest rates and changes to terms and conditions.