3. www.lendingstandardsboard.org.uk
A fair outcome
The need to balance supporting the customer
with commercial realities
The customer The firm
Sympathetic and positive treatment Debtor’s obligation to repay
Recognition of their particular
circumstances
Openness and engagement from the
customer
Affordability Reliance on the I & E form
Equality of treatment
Clarity on process and outcome Commitment
Light at the end of the tunnel Cost of processing and support
4. www.lendingstandardsboard.org.uk
Who should set the standards?
• The industry or the regulator?
– Do you really want the FCA dictating how you run your
business and serve your customers?
• Minimum standards v good practice v best in class
• The role of industry codes
• Inconsistent requirements placed on DCAs by lenders
– What is driving this?
5. www.lendingstandardsboard.org.uk
Gaining assurance
• Due diligence plus oversight and testing
• Quality management framework
• A focus on:
– Listening skills
– Call calibration
– Call notes
– Training
– Incentive schemes
• Best outcome seen where there is a partnership between
debt owner and DCA
6. www.lendingstandardsboard.org.uk
Financial Difficulties: Latest
review
Objective
• Assessment of how subscribers treat customers in financial
difficulty, including:
– Policies, processes and controls
– Third party due diligence
– Governance and oversight
The review focused on
• 9 subscribers, with 4 DCAs and 3 debt purchase firms (DPF)
• The customer journey
The results
• 1 green, 6 amber and 2 red
7. www.lendingstandardsboard.org.uk
Findings
• At 8 of the 9 subscribers we found the majority of customers
being treated sympathetically and positively
• Standards fell significantly short of expectations at one
subscriber, one DCA and one DPF
• Ineffective oversight of outsourced activities was a feature in
weaker reports
• Concern over
– Quality of the initial and ongoing training of DCA staff
– incentive schemes
• The above translated into
– Scripted processes
– Affordability assessments not being carried out properly
– Not checking that customers are up to date with priority debts
– Breathing space not always being applied
– Referrals to sources of free money advice not always made
8. www.lendingstandardsboard.org.uk
What are others saying?
• Recognition of improved collection standards at lenders and their
agents
• Good progress on supporting vulnerable customers (but more can
be done)
• Raised with LSB and in Code review submissions:
– Varying polices on reducing or freezing interest and charges
– Unwillingness to accept ‘token payments’ but also concerns about
‘over-forbearance’
– Need for longer breathing space
– Failure to take into account customer’s circumstances
– Failure to acknowledge and/or process DMHEF
– New pension freedoms
– Confusing and misleading communications
9. www.lendingstandardsboard.org.uk
Vulnerable Customers : WIP
• High on everyone's agenda:
– FCA
• Occasional Paper No. 8: Consumer Vulnerability
– BBA
• Bereavement
• Vulnerability Taskforce
– LSB
• Code development reviews
– MALG
• Mental health : Good Practice Awareness Guidelines
• Recording of sensitive data
• Willingness to embrace best practice but codifying it isn’t easy
• Definition of vulnerable?
10. www.lendingstandardsboard.org.uk
The future
• Some challenges:
– Use of new channels and technology to support customers better
– Ensuring regulation doesn’t prove to be an obstacle (not just
FCA)
– Treating customers as individuals whilst needing process and
compliance audit trails
– Build on increasingly positive view of the industry
• Consolidation of market and reduction in panel size
• What can industry codes contribute?
• Lending Code ‘Associate Subscribers’
– Review of the Code
