Overseen by the Lending Standards Board (LSB), the Standards of Lending Practice (SLP) covers loans, credit cards, charge cards, and overdrafts, offering a separate set of Standards for asset finance.
Achieving full SLP registration has come after a period of 'interim' status, during which Atom worked with the LSB to complete an end-to-end analysis of their existing policies, processes, and procedures to check they met their SLP’s standards.
As customers are at the heart of Atom bank’s activities, they operate on the basis that lending to small business customers should be subject to the highest standards of rigour and control. Registration with the LSB further confirms this commitment to treating customers fairly and providing responsible lending outcomes throughout the product life cycle.
It will also enable Atom to draw insights from consumer groups, debt advice bodies, and other industry stakeholders who work with the LSB, to identify emerging areas of customer detriment and share practice with other firms.
The LSB drives fair customer outcomes within financial services through independent oversight. They do this by requiring registered banks and lenders to operate to the benchmarks set out in their voluntary SLP.
The SLP set the benchmark for good business lending, outlining the way lenders are expected to deal with customers through the entire development of a product. The Standards are designed to work alongside the Financial Conduct Authority (FCA), covering areas that statutory regulation does not.
The Standards of Lending Practice for business customers provide protections for small and medium enterprises (SMEs) with a consolidated turnover of up to GBP 25 million across loan, commercial mortgage, overdraft, and credit card products.
According to the Federation of Small Business, SMEs constitute an important element of the UK’s economy. There are approximatively 5.4 million SMEs in the UK who together employ 24.3 million people and account for 99% of all UK businesses. They represent approximately 60% of employment and roughly 50% of total private business revenue.
Despite this, many SMEs often face quite intractable problems obtaining access to finance. Bank lending makes up 85% of the stock of debt for SMEs. When SMEs do seek loans, the majority consider only one bank – usually their current account provider. Therefore, the chances of being rejected are over 50% higher when applying to a new provider. This helps to explain why the majority of the lending to date has been provided by larger banks.
A lack of diversity amongst lenders can further amplify the business cycle if traditional lenders behave in similar ways.
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