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In the FCA’s recent Dear Chair letter, Boards have been asked to consider the performance of the bank relating to collections and recoveries in the SME sector.
Against the backdrop of the headwinds in the economy, the FCA are seeking to ensure that banks are achieving fair and consistent outcomes for SME customers where they have fallen into arrears.
Key areas to address include:
- Systems and controls – these should be arranged to assist with the delivery of fair customer outcomes and policies. Procedures should be clear with adequate information, allowing staff to make judgements supporting fair consumer outcomes.
- Record keeping – complete and efficient records should be kept to test whether fair outcomes are being delivered to borrowers.
- Forebearance – forbearance and due consideration should be demonstrably offered, where appropriate.
- Vulnerable customers – drafting clear, effective, and appropriate policies and procedures for the fair treatment of customers who the firm understands, or reasonably suspects, to be vulnerable.
- Third party management – the management of third parties should be subject to a suitable risk framework that helps ensure fair treatment of SMEs.
- Quality assurance and customer outcomes testing – these should be carried out for customer processes. Results can then be used for root cause analysis and improvement of customer outcomes.
- Training – staff should receive suitable training that equips them to effectively support SME customers.
- Management information – senior management should receive efficient management information that allows holistic oversight of SME customer treatment.
- Senior management awareness – senior managers responsible for collections and recoveries should have suitable levels of awareness and oversight of SME customer matters.
How can we help
As the new Consumer Duty is rolled out, there will be a heightened focus on ‘outcomes-based’ regulation, ensuring that you achieve good outcomes in all areas of your business.
Our experts can support you by carrying out an independent assessment of your bank’s performance in each of the areas highlighted by the FCA, helping to fix any gaps while giving you comfort that your bank is in good health.
Get in touch if you would like to discuss how we might help you define good outcomes, appropriate management information, and manage these in the long-term.
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