About the LSB
Promoting and maintaining a fair deal for borrowers
Promoting fair lending
The Lending Standards Board works to a single, clear remit: to promote fair lending. Our vision is to ensure that all personal and small business borrowers receive a fair deal from their lender as set out in the Standards of Lending Practice.
We want to be the prime conduct self-regulatory body in financial services.
We follow an outcome-focused approach to overseeing the Standards and take action where our registered firms fail to meet them. A powerful combination of market intelligence, industry experience and collaborative partnerships with trade bodies, regulators and other industry stakeholders allows us to meet five main aims.
Our key strategic aims are:
- To promote and help deliver fair outcomes and greater consistency for personal and small business borrowers;
- To achieve high level of market coverage of personal and business lenders;
- To demonstrate how self-regulation can deliver good customer outcomes and can complement the work of the FCA;
- To be recognised as a leading, influential voice for personal and business lending; and
- To add value for registered firms.
As our work and remit continues to evolve and expand, some basic principles remain of paramount importance to us:
- Consumer protection is at the heart of what we do;
- We work hard to ensure the integrity of the oversight regime is maintained and that any growth is undertaken in a sustainable manner;
- We want the markets to operate well for consumers;
- Core to maintaining the credibility of our regime, we work closely with our registered firms to ensure the Standards are being adhered to, and if they are not, we take appropriate action; and
- We drive the ongoing development of the Standards so that they keep pace with industry developments.
Read more about our work in our 2017-20 business plan.
View our latest annual report here.
We are funded by our registered firms but we operate as an independent body, governed and overseen by an independent Board composed of Non-Executive Directors.
Developing and maintaining standards in areas not covered by statutory rules
Through the Standards of Lending Practice, the LSB protects consumers and small businesses in areas not covered by existing regulation.
Improving customer outcomes
Identifying and sharing best practice supports the achievement of desired customer outcomes. In addition to our assurance work, we actively seek input from consumer groups, debt advice bodies and other industry stakeholders. When we identify areas where improvements might be achieved, we hold discussions with the industry with the aim of adopting them in the form of new guidance or strengthened Standards.
A dynamic process
The LSB continually researches areas of potential or emerging customer detriment. We propose new standards supported by best practice where these are not covered by detailed FCA rules or elsewhere. Recent examples have been supporting customers in vulnerable circumstances, understanding the challenges Registered firms face in the digital space and helping Firms to identify customers displaying early signs of financial difficulty. Click here to view some of the work we have done in this area.
Developing and maintaining a credible self-regulatory code
To have credibility, self-regulation also requires significant market coverage amongst those firms that provide in-scope products and services. We have substantial market coverage from firms that have committed to adhering to the Standards of Lending Practice.
Branching out into new areas of lending
In 2014, the LSB extended self-regulation to Debt Collection agencies (DCAs) and Debt Purchase firms (DPFs). As we extend our product scope, we expect to attract a broader range of firms.
Complementing the work of the statutory bodies, especially the FCA
We believe that a proportionate approach to regulation balances adequate consumer protection and a properly functioning competitive market. The LSB maintains an effective, collaborative relationship with the FCA and takes great care to complement, rather than duplicate, the work of industry regulators. This approach delivers a range of advantages that benefit not only the customer but the industry as a whole:
- The ability to set standards in areas not covered by the FCA or other regulators leads to greater protection for customers;
- The development of best practice to improve customer outcomes and greater consistency of treatment;
- Changes to the Standards and the Information for Practitioners can be implemented much faster than statutory rules, allowing us to respond rapidly to emerging issues; and
- A cost-effective approach benefits both firms and their customers who ultimately bear the costs of regulation.
A home of self-regulation. Helping to shape the industry for the benefit of all stakeholders
As an organisation dedicated to protecting the interests of consumers and small businesses, we have a responsibility to maintain a visible presence within the lending industry. Working closely with Firms, industry regulators, trade bodies and consumer organisations, we can help to shape the landscape for the common good of all stakeholders:
- Being an industry commentator, providing ‘think pieces’ and reports highlighting good practice and drawing attention to areas for improvement
- Raising with other regulators and policy makers regulatory gaps and deficiencies identified by our oversight work that sit outside the scope of the Standards.
- Participating in consultations and working groups run by government and other regulators.
- Maintaining close working relationships with trade bodies and consumer organisations as well as industry regulators.
- Providing assistance to trade and self-regulatory bodies in the design and operation of their monitoring regimes.
Other industry agreements
Voluntary agreements are designed to fill gaps in consumer protection where, for example, customers would benefit from greater clarity or consistency.
Access to Banking Standard
Building on recommendations proposed by Professor Russel Griggs in his independent review of the Access to Banking protocol in 2016 and aimed at helping minimise the impact of bank branch closures on customers and local communities, we are now responsible for the oversight of this Standard. This means that we independently monitor and report on the application of the Standard by the following firms:
- Barclays Bank
- Bank of Ireland
- The Co-operative Bank
- Clydesdale and Yorkshire Bank
- Danske Bank
- First Trust Bank
- HSBC UK
- Lloyds Banking Group
- Nationwide Building Society
- Royal Bank of Scotland
- Santander UK
This industry-wide agreement, which has the support of Government, the regulator and the main high street banks, aims to ensure customers affected receive improved notification of potential branch closures, greater clarity on the reasons for the closure and adequate help in accessing alternative banking services.
Credit Card Market Study (CCMS)
The Financial Conduct Authority (FCA) has undertaken a market study looking at how consumers use their credit cards and whether this product is working as well as it could for all consumers. In July 2016, the FCA published its final report along with a package of remedies to address the issues it has identified. Responsibility for the oversight of four of these remedies was passed to the LSB:
- Expiry of a promotional rate
- Prompting customers who are nearing their limit
- Allowing customers to request a ‘later than’ payment date
- Enabling customers to exercise greater control over unsolicited increases in their limit.
Firms are currently working to embed the required changes/updates within their processes. An overview of the expected customer outcome and the date that these will become effective are set out below:
- Promotional rate expiry: credit card customers on a promotional rate are better prepared to make timely and informed decisions about the options open to them when this rate comes to an end. Implementation date: April 2018
- Borrowing prompt: borrowing prompts help customers to take account of their spending, to make timely and informed decisions about how they use their credit card and avoid incurring an over limit charge. Implementation date: July 2018
- Payment date changes: allowing customers to set a more convenient payment date for future statements enables them to exercise greater control over their credit card account. Implementation date: April 2018
- Unsolicited credit limit increases: customers are able to exercise greater control over how their credit limit is managed through the provision of clear information and easier ways to express their preferences regarding unsolicited increases in their limit. Implementation date: November 2018
The LSB is engaging with firms and the FCA as the implementation timetable progresses.
Supporting and enhancing the credibility of the LSB
Adhering to the Standards of Lending Practice adds value to firms in a number of ways:
- By enhancing their reputation, helping them and the wider industry, rebuild trust;
- By demonstrating a firm’s engagement with our development and research work which helps improve and enhance self-regulation;
- By highlighting a commitment to fair lending to your customers and prospective customers;
- By demonstrating to regulators, government and opinion formers that you are committed to treating your customers fairly; and
- By providing a credible regime that complements statutory regulation.
The initiatives we take
Committing to the Standards of Lending Practice is a mark of trust, reassurance and integrity. We support and enhance credibility through proactive, robust, independent oversight that promotes the achievement of fair customer outcomes.
Regular reviews and updates ensure the Standards are robust, responsive and relevant. Needless to say, we expect all Firms applying for registration to provide comprehensive evidence of how they meet our Standards.
Gathering and sharing best practice also plays a key role in helping Firms to improve customer outcomes, whether via collaborative workshops, publishing research and reviews, or the provision of informal advice and guidance.
Developing close relationships with a range of stakeholders
We have developed close links with other customer protection and credit regulation organisations, which allows us to meet our goals as effectively as possible.
Financial Conduct Authority (FCA)
For the benefit of registered firms and their customers, we work closely with the FCA to ensure our work is complementary to statutory regulation. A formal memorandum of understanding is in place in order to provide a framework for the relationship with.
Financial Ombudsman Service (the ‘Ombudsman’)
We stay in close contact with the Ombudsman, with an agreed Statement of Roles and Responsibilities setting out the framework for discussion and co-operation. Feedback from the Ombudsman on existing and new classes of complaints provides an important input to the development of our work programme.
Money Advice Service (MAS)
Although we do not provide direct financial guidance to consumers, we support the work of MAS in helping consumers understand their financial obligations. Improving the quality of debt advice and the ways in which the early signs of financial difficulties are identified complement our goal of fair lending.
Credit Services Association (CSA)
We maintain a close working relationship with the CSA, with whom we have a memorandum of understanding and whose chief executive attends our Board in an observer. We continue to develop this relationship as more debt collection and debt purchase Firms register.
Debt advice bodies and charities
The LSB enjoys a close working relationship with the key debt advice bodies and charities. Regular contact provides access to valuable market intelligence, real-world information and research – all key elements in our oversight work and the identification of emerging issues.
Other trade associations
The LSB also regularly meets with representatives of other key consumer credit trade bodies.