LSB’s Standards of Lending Practice for personal customers to be retired in March 2025

The Standards of Lending Practice for personal customers (‘the personal Standards’), which have pioneered an outcomes-focused approach to consumer lending protections since 2016, will be retired on 31 March 2025, the LSB has announced.

This decision follows a full review of the personal Standards, carried out in 2024. The review found that, following recent changes in the statutory framework, particularly the introduction of the FCA’s Consumer Duty in 2023, there is now considerable overlap in coverage between the personal Standards and statutory regulation.

While the personal Standards will be wound down, the LSB’s efforts to challenge the financial services sector to deliver better outcomes for their personal customers will continue. The review identified demand from firms and other stakeholders for the LSB to continue to provide support in areas where the personal Standards had a particular impact on customer outcomes, and where firms may require additional support beyond the Consumer Duty as they consider ‘how’ to deliver the right customer outcomes.

To meet this demand, the LSB will develop new guidance for firms in key areas relevant to personal financial services customers – including areas identified in this review and those where, through the LSB’s wider work, it is clear that firms would benefit from support.

These areas could include, for example, how firms should support vulnerable customers or customers in financial difficulty, how firms can protect customer outcomes while managing digital transitions, and how firms can ensure they are adopting an inclusive approach.

The LSB will also be rolling out customer outcomes testing and benchmarking activity designed to allow firms to track the impact of their efforts to meet best practice and understand how customer outcomes are improving over time. Benchmarking will be delivered at a sector-wide level and within peer groups.

Emma Lovell, LSB chief executive, says: “We’re proud of the impact the personal Standards have had on consumers over the last eight years, and we look forward to building on their legacy in future. The LSB has extensive experience of how firms can take steps to deliver better outcomes for their customers – and protect them from harm. While the introduction of the Consumer Duty has expanded the scope of the statutory regulatory framework, we know there is still more the LSB can do to support firms and their personal customers.

“Whether it’s financial inclusion, or supporting vulnerable customers, we’re committed to sharing our insights with the financial services sector and to sharing best practice so that as many customers as possible are able to achieve better outcomes.”

Any firms registered with the personal Standards will be automatically de-registered from 31 March 2025.

Among the key findings of the LSB’s review were:

  • A number of firms and stakeholders highlighted the positive impact of the personal Standards on firms and their customers. Registered firms noted the Standards had shifted their approach to customer outcomes beyond mere compliance to an active focus on the outcomes delivered to customers. Since 2020, reviews of registered firms’ adherence to the personal Standards have identified 153 areas where action has been required to achieve compliance, with the majority of the required actions completed by the time of this consultation.
  • While the significant overlap between Consumer Duty and the personal Standards means the latter will be retired, firms noted that their experience with the personal Standards had helped prepare them for the Duty’s introduction.

More information on the planned guidance, outcomes testing and benchmarking activity in the personal finance space will be available on the LSB’s website in due course.

In February 2024, the LSB published the outcome of a similar review of the Standards of Lending Practice for business customers. This review found that the business Standards continued to set an appropriate level of protections for UK SMEs. The business Standards remain the only independently overseen lending protections for many UK SMEs and are one of just four industry codes recognised by the FCA.

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