LSB review highlights importance of SME protections

The LSB’s review of registered firms’ application of its Standards of Lending Practice for business customers has found 102 areas where action has been required to bring firms into compliance with the Standards’ requirements.

The review considered 16 UK lenders, ranging from major high street banks to fintechs and challenger banks. At the time of publication, 59% of the findings identified by LSB had been addressed by firms, with work in progress to resolve the remainder.

The LSB drew attention to the following areas for improvement:

• Treatment of customers in financial difficulty (31 findings), and the processes for identifying and supporting vulnerable customers (19 findings)
• Governance and oversight (24 findings)
• Processes for putting the Standards into practice (70 findings)
• Issues with how employees adhere to requirements (15 findings)
• Systems for recording, monitoring and sharing information (9 findings)
• Policies on the customer journey (8 findings)

Of the findings, 35 were classed as ‘minor’ (low impact on customer outcomes), 60 were classed as ‘moderate’ (some improvements required for consistent fair outcomes), and 7 were classed as ‘major’ (requiring urgent attention). There tended to be a higher level of severity for governance and oversight issues, for which 79% fell under the ‘moderate’ or ‘major’ categories.

Emma Lovell noted that firm performances were encouraging, both for the absence of ‘severe’ findings and the progress made so far towards issues identified. However, she urged that this progress had to be maintained.