Lenders must offer ongoing support to help borrowers manage loans and changing circumstances
Many borrowers assume that customer support services offered by banks and lenders are only relevant before entering into a loan agreement or are there purely to help consumers who might have questions around eligibility, application processes, or their loan documentation.
The reality is that, in the modern regulated lending environment, loan providers are expected to ensure that support for borrowers doesn’t end once funds have been released. Changes in consumers’ financial circumstances, unexpected life events, and evolving regulatory expectations have reinforced the importance of responsible lending, with support that continues throughout the lifetime of a lender’s relationship with each borrower.
How UK Lenders Are Expected to Support Borrowers Experiencing Changing Circumstances
Many established lenders operating under Financial Conduct Authority (FCA) authorisation already see ongoing communication and accessible support as an important part of how they help consumers manage their loans, and in some cases consumers may require little support and be able to repay their loans comfortably without much interaction.
However, financial situations can and do change. Borrowers who may have been able to comfortably meet affordability requirements when originally applying for a loan can find that changes to their employment, health, living costs and other circumstances impact their ability to keep up with regular repayments before the loan term ends.
This is why many lenders actively encourage consumers to contact them as a first priority if they anticipate having difficulties meeting their repayments, as seeking support during financial difficulty early can help them address changes in their finances or income before they begin to struggle to pay their agreed instalments on time.
Early communications, ideally before missed repayments, may mean that lenders have more opportunities to understand the circumstances involved. Provided they are aware of the situation, they may be able to discuss appropriate options that are available, based on the lender’s policies, the borrower’s position, and their regulatory obligations.
Support from lenders may be just as valuable for consumers experiencing situations that aren’t directly related to financial difficulties. They may have questions around making additional repayments, being able to settle a loan early, or finding out how overpaying impacts their overall interest.
Being able to speak with an experienced adviser through email, online chat, secure digital messaging or phone helps consumers understand the implications of any decision they might make. It might also reduce the likelihood of a borrower delaying asking for help because they are unsure who to contact or are worried about a lender’s reaction if they are experiencing financial difficulties.
The Benefits of Good Support Standards in the Consumer Lending Sector
Offering ongoing support isn’t only beneficial for borrowers; it also gives lenders a way to build better relationships with their customers and encourages open communication from initial application through to the closure of a loan account.
Consumers who know how to find assistance are more likely to raise concerns before payment difficulties become serious, which in turn enables lenders to respond appropriately and, where possible and consistent with their policies, discuss potential solutions before arrears start to accumulate.
Expectations around customer service also mean more lenders are revisiting the ways they allow borrowers to contact them. Many are combining the convenience of digital messaging with a focus on one-to-one support, ensuring borrowers can speak with a real person rather than relying on automated FAQs.
Advisers who are trained to provide sensitive support while discussing personal difficulties, who can explain products or terms in a clear, understandable way and who take the time to listen to concerns or answer questions in full can help consumers feel better supported regardless of the reason they have needed to contact their lender.
Good customer support standards may involve directing borrowers to independent charities or organisations that offer free debt advice and financial guidance. Signposting is an important factor in treating customers fairly and recognising that some situations could require specialist assistance beyond the lender’s own in-house services.
This ensures that vulnerable consumers and those experiencing financial distress are pointed towards the most relevant and appropriate services and support systems, rather than being left to try and resolve their financial challenges alone.
Why Customer Support Is a Key Aspect of Responsible Lending
The Financial Conduct Authority’s (FCA) Consumer Duty has reinforced regulatory expectations that lenders should work to deliver good outcomes for their customers throughout the duration of any financial product or agreement, rather than concentrating on communication and information-sharing when a product is purchased, or a loan entered into.
Responsible lending is increasingly regarded as an ongoing commitment any regulated firm makes when they offer a consumer a credit product, including short-term loans, rather than a single affordability assessment that is completed before a loan begins, or publishing information about comparable loan products, interest charges and fees online.
Clear communications, accessible support for borrowers of all ages and backgrounds, and timely responses to enquiries or questions, especially when customers are dealing with changing circumstances, can all contribute to helping keep borrowers informed and engaged with their loan provider.
Regulated providers, such as Cashfloat, a UK direct lender, are continuing to invest in customer services, alongside digital technology which supports aspects like free online eligibility checkers and loan comparison tools. This is based on the belief that personal support and the convenience of digital tools should work together, rather than having one approach or the other, or replacing phone lines with digital systems.
Automated online services can, of course, be a way to provide quicker access to information, support online account management and ensure borrowers can check their remaining balances or forthcoming payments. However, it cannot replace the value of experienced advisers who can offer more detailed guidance or discuss individual circumstances in confidence.
Responsible lending, therefore, isn’t only a case of applying ethical, fair and transparent standards when deciding whether or not a loan application should be approved.
It is also about maintaining high standards of communication, ensuring borrowers know how they can ask for support or information, and ensuring consumers understand their obligations, seek help when needed, and have the resources to manage their borrowing with confidence.