Promoting fair lending

The Lending Standards Board works to a single, clear remit: to promote fair lending. Our role is to make sure all personal and small business borrowers receive a fair deal from their lender as set out in the Standards of Lending Practice.

We follow an outcome-focused approach to monitoring 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 objectives.

Our key strategic aims are:

  • To promote and 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.

View our latest annual report here.

Funding

The LSB is funded by Registered Firms who pay an application fee upon registration and an annual fee that reflects the size and complexity of their business.

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 regularly propose new standards supported by best practice where these are not covered by detailed FCA rules. Recent examples have been supporting customers in vulnerable circumstances, and helping Firms to identify customers displaying early signs of financial difficulty.

Developing and maintaining a credible self-regulatory code

To have credibility, a self-regulatory code also needs to offer significant market coverage amongst those firms that provide in-scope products and services. The majority of the major providers of products covered by the Standards have registered with the Standards of Lending Practice.

Branching out into new areas of lending

In recent times, the scope of firms covered by the Standards have been extended to allow Debt Collection agencies (DCAs) and Debt Purchase firms (DPFs) to register in their own right. Over time, we also expect to welcome firms from other sectors of the consumer credit market.

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 consumer 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 consumers;
  • The development of best practice to improve customer outcomes and greater consistency of treatment;
  • Changes to the Standards and guidance 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.

Helping to shape the industry for the benefit of all stakeholders

As an organisation dedicated to protecting the interests of consumers and SMEs, we have a responsibility to maintain a visible presence within the lending industry. Working closely with Firms, industry regulators 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 lies 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.

Supporting and enhancing the credibility of the LSB

Registering with the Standards of Lending Practice adds value to Firms in a number of ways:

  • 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

Signing up to the Standards 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 informal advice and guidance.

Developing close relationships with a range of stakeholders

We have developed close links with other consumer 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 our relationship with the FCA.

 

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 work programme.

 

Money Advice Service (MAS)

Although we don’t 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 perfectly complement our goal of fair lending.

 

Credit Services Association (CSA)

We maintain a close working relationship with the CSA, with whom we have a MoU and whose chief executive sits on our Board as an observer. We continue to develop this relationship as more debt collection and debt purchase Firms register.

 

Banking Standards Board (BSB)

Close cooperation with the BSB allows us to avoid duplication in their remit of identifying, developing and setting specific voluntary standards for Registered Firms.

 

Consumer bodies

The LSB enjoys a close working relationship with the key debt advice bodies. 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.