LBS has published an updated guide for firms, setting out examples of the approach they may wish to consider on product sales, to be compliant with the Standards of Lending Practice for business customers. The guidance addresses:
- providing clear guidance to customers on information and documentation they will need to submit during application – and firms should consider how this is presented to different customer types.;
- telling customers how long it is likely to take to get a decision, and keeping them informed on the progress of their application;
- making sure customers know that checks with CRAs will be made, and that information will be provided by the lenders to CRAs;
- assessing whether the customer will be able to repay their loan in a sustainable manner – and in relation to the Coronavirus Business Interruption Loan Scheme which requires lenders to look through the impact of Covid-19 when assessing the viability of customers’ businesses;
- providing clear information about how any offered indicative quotation facility works;
- where CONC is relevant, presenting information about the main features of a credit card in a summary box form;
- providing clear information on key features, breakage or repayment fees – and doing what they can to make sure the customer understands the terms;
- ensuring customers understand what security they may be required to provide and why – and making sure they do not require excessive security – and also making sure any guarantor understands the extent of their liability and their obligations under the agreement – and this may include evidencing whether the guarantor has taken, or refused to take, independent legal advice;
- ensuring customers are informed how and when security will be released;
- encouraging customers to take independent advice while confirming in writing the key terms of the facility; and
- making sure customers know when they are likely to get notification of their borrowing and conditions that apply to it;
- taking account of the nature of the customer when setting the monitoring information the lender will require; and
- putting in place measures to accept unlimited guarantees only where this is to support a customer’s liabilities under a merchant agreement where the lender offers unsecured advances of cash, based on future credit and debit card sales.