Emma BondThe Lending Standards Board (LSB) has published a thought piece looking at the UK’s cost of living crisis and how firms can support customers in pre-arrears and financial difficulty. The thought piece identifies that the cost of living crisis is contributed to by a combination of inflation, increased energy costs, and the impact of interest rate and tax rises.
The Standards of Lending Practice require firms to:
- ensure that the risk of financial difficulties is minimised by taking steps throughout the product and service lifecycle;
- identify signs of financial difficulty and then offer appropriate support; and
- pro-actively encourage customers to contact them if there has been a change in the customers’ circumstances which may impact on their ability to repay their borrowing.
LSB considers that firms can support customers by:
- having a well-designed, effective and regularly reviewed financial difficulties policy and process in place;
- regularly reporting to Committees with management information, customer reviews and other insight;
- training staff on how to support customers in financial difficulties;
- conducting effective income and expenditure assessments;
- reviewing how they encourage contact from customers and considering how to increase the likelihood of pro-active customer contact;
- signposting to relevant third-party organisations; and
- taking steps to support staff who may also be impacted by financial difficulties.
