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The provisions relating to financial difficulties contained in the
Lending Code are a key part of the protection that it offers.
Subscribers to the Code must act sympathetically and positively when
dealing with customers in financial difficulties and explore a range of
options with them. It is essential that firms treat customers who are
struggling, fairly and that where they are willing to try to meet their
obligations, that they help them to do so. Full details of the Lending
Code’s provisions for dealing with customers in financial difficulties
can be found in Section 9 of the Code.
We included eight subscribers in this review, representing a crosssection of lenders offering overdrafts, loans and credit cards through
branch, internet and telephone channels. The work involved visits to
firms’ own in-house collections and recovery teams and also reviews
of work at independent third party debt collection agents where
subscribers are also responsible for ensuring Code compliance. The
scope of the work included listening to live and recorded calls from
customers, reviewing case files including complaints and an
assessment of the training and internal monitoring by management
to ensure that adequate standards of compliance are being met. In all
we visited 21 operational sites, listened to 571 customer calls and
reviewed 617 case files.
As in previous reviews we found that generally staff try to help
customers through their financial difficulties and, where appropriate,
they are ready to refer customers to specialist advisers, either inhouse or to external, independent advice bodies where they can get
help in establishing sustainable repayment solutions. We also saw
evidence of some very positive dialogue between lenders and
advisers to address specific and more general problems.
However we did not find acceptable standards in every firm visited.
We issued five GREEN rated assessments where standards were
generally good, one AMBER report where issues were raised that
required corrective action and two RED reports reflecting evidence of
significant areas of poor practice that required urgent action. In all
cases where issues were found, we have required action plans from
firms and these are being followed up.
Given below are examples of issues identified and brief case studies
that may help to illustrate our views of what constitutes good/bad
practice.
• Acting sympathetically and positively
Customers must be able to rely upon their lenders for help when
they are in financial difficulties. The Code requires subscribers to
act sympathetically and positively and to explore a range of
options with the customer including establishing a repayment
plan that they can afford. An excessive focus on simply getting an
immediate payment or a promise to pay, especially when it is
evident that the customer cannot afford to do so is not
sympathetic or positive.
It is essential when dealing with all customers, especially those
who may be feeling vulnerable or anxious, that staff treat them
courteously and politely and that they listen carefully to what
they are saying in order that an appropriate repayment
arrangement can be agreed. At two firms we were concerned to
hear calls where customers were spoken to rudely or brusquely
and staff gave little sign of being willing to help. Against this, in
some firms we did see a very good approach demonstrating a
real focus on helping the customer
Source:
http://www.lendingstandardsboard.org...Feb%202011.pdf
It continues on with regards to proactive contact etc, etc,
------------------------------- merged -------------------------------
This bit is important on financial hardship claims
• Interest and charges concessions
Firms are required to consider reducing or stopping interest and charges when a customer identifies that they are in financial difficulties.
The lender’s decision whether to make concessions should reflect the customer’s lack of ability to pay rather than whether they are using free sources of debt advice. We also expect, where possible, consistent concessions policies to be applied for customers holding more than one product type with an individual firm.
During this review we identified that one firm was allowing concessions on certain products but had not made systems changes to allow this to happen across its entire account range.
At another firm we found that customers dealing with fee-free debt advisers were offered concessions but where advice was being paid for, no concessions were being allowed.
We consider that treating customers differently according to whether and, if so, how they are accessing advice is inherently unfair. Lenders should apply consistent policies that reflect the
customer’s financial situation.
Lending Code are a key part of the protection that it offers.
Subscribers to the Code must act sympathetically and positively when
dealing with customers in financial difficulties and explore a range of
options with them. It is essential that firms treat customers who are
struggling, fairly and that where they are willing to try to meet their
obligations, that they help them to do so. Full details of the Lending
Code’s provisions for dealing with customers in financial difficulties
can be found in Section 9 of the Code.
We included eight subscribers in this review, representing a crosssection of lenders offering overdrafts, loans and credit cards through
branch, internet and telephone channels. The work involved visits to
firms’ own in-house collections and recovery teams and also reviews
of work at independent third party debt collection agents where
subscribers are also responsible for ensuring Code compliance. The
scope of the work included listening to live and recorded calls from
customers, reviewing case files including complaints and an
assessment of the training and internal monitoring by management
to ensure that adequate standards of compliance are being met. In all
we visited 21 operational sites, listened to 571 customer calls and
reviewed 617 case files.
As in previous reviews we found that generally staff try to help
customers through their financial difficulties and, where appropriate,
they are ready to refer customers to specialist advisers, either inhouse or to external, independent advice bodies where they can get
help in establishing sustainable repayment solutions. We also saw
evidence of some very positive dialogue between lenders and
advisers to address specific and more general problems.
However we did not find acceptable standards in every firm visited.
We issued five GREEN rated assessments where standards were
generally good, one AMBER report where issues were raised that
required corrective action and two RED reports reflecting evidence of
significant areas of poor practice that required urgent action. In all
cases where issues were found, we have required action plans from
firms and these are being followed up.
Given below are examples of issues identified and brief case studies
that may help to illustrate our views of what constitutes good/bad
practice.
• Acting sympathetically and positively
Customers must be able to rely upon their lenders for help when
they are in financial difficulties. The Code requires subscribers to
act sympathetically and positively and to explore a range of
options with the customer including establishing a repayment
plan that they can afford. An excessive focus on simply getting an
immediate payment or a promise to pay, especially when it is
evident that the customer cannot afford to do so is not
sympathetic or positive.
It is essential when dealing with all customers, especially those
who may be feeling vulnerable or anxious, that staff treat them
courteously and politely and that they listen carefully to what
they are saying in order that an appropriate repayment
arrangement can be agreed. At two firms we were concerned to
hear calls where customers were spoken to rudely or brusquely
and staff gave little sign of being willing to help. Against this, in
some firms we did see a very good approach demonstrating a
real focus on helping the customer
Source:
http://www.lendingstandardsboard.org...Feb%202011.pdf
It continues on with regards to proactive contact etc, etc,
------------------------------- merged -------------------------------
This bit is important on financial hardship claims
• Interest and charges concessions
Firms are required to consider reducing or stopping interest and charges when a customer identifies that they are in financial difficulties.
The lender’s decision whether to make concessions should reflect the customer’s lack of ability to pay rather than whether they are using free sources of debt advice. We also expect, where possible, consistent concessions policies to be applied for customers holding more than one product type with an individual firm.
During this review we identified that one firm was allowing concessions on certain products but had not made systems changes to allow this to happen across its entire account range.
At another firm we found that customers dealing with fee-free debt advisers were offered concessions but where advice was being paid for, no concessions were being allowed.
We consider that treating customers differently according to whether and, if so, how they are accessing advice is inherently unfair. Lenders should apply consistent policies that reflect the
customer’s financial situation.
