LSB reviews Lending Code: LSB has published the findings from its Lending Code (Code) governance and control framework review. Within the nine firms surveyed as part of the review LSB found:

  • that those firms where senior management understood the Code and emphasised its importance to other employees performed best in the review;

  • some firms' senior management and compliance staff had poor knowledge of the Code and so there was a lack of clarity in overall governance;

  • that there was a direct correlation between the experience and seniority of the Code Compliance Officer (CCO) and his ability to influence the firms' level of compliance;

  • most firms operated a "three lines of defence" approach to their assurance framework and this varied in effectiveness across the sampled firms; and

  • all firms appeared to have an adequate outsourcing framework in place.

On this basis the LSB recommended that:

  • the existing section 11 of the Code could be updated to provide guidance for CCOs on their role and for firms in terms of the authority that the CCO should have;

  • the Code should be strengthened with regard to responsibilities for outsourced activities, other than debt sale and debt collection (which the Code already covers);

  • that all subscribers reflect on their own internal assurance framework and how this ensures there is effective oversight of compliance with the Code.

LSB also assessed the firms' approaches to change management, ongoing compliance with the Code and breach management. Based on its findings in these areas it recommended that small sections on change management and breach management be inserted into the Code and that firms must be able to evidence their compliance with the Code. (Source: Lending Code Governance and Control Framework Review)