- Santander UK exits Lending Standards Board over regulatory overlap
- Withdrawal aims to reduce confusion and increase regulatory certainty
- Other major banks considering similar moves, citing redundant regulation
The fifth-largest bank in the United Kingdom is withdrawing from the Lending Standards Board, citing the potential for consumer and staff confusion.
Santander UK, the fifth-largest high-street bank in the United Kingdom, is terminating its membership in a prominent lending standards organisation due to the duplication of industry-required regulatory standards.
The Spanish-owned bank formally informed the Lending Standards Board of its decision to resign last week. The reason was the impending enforcement of new fraud reimbursement regulations, which the Payment Systems Regulator and the City watchdog’s establishment of the Consumer Duty will supervise.
Santander UK stated in a letter to the LSB that the newly established regulatory frameworks would precede the voluntary industry standards currently outlined in the LSB codes.
This results in redundant regulation and may cause staff and customers to become uncertain about which standards apply.
Additionally, the bank stated that withdrawing from the LSB would “increase confidence and certainty regarding the regulatory environment.” We can reallocate resources towards addressing critical customer and regulatory obligations by eliminating redundant work.
According to industry sources, Following Santander UK’s decision to cease operations with the LSB, several other prominent financial institutions are reportedly contemplating doing the same.
Originating in the Banking Code Standards Board, established in 1992 by the British Bankers’ Association and other trade associations, the LSB is a self-regulatory organisation.
The subsequent financial crisis, which broke out fifteen years later, brought to light a multitude of deficiencies in the behaviour of the industry and also facilitated the establishment of the Banking Standards Board (BSB).
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The Times reported last year that the BSB had ceased operations after major lenders refused to continue financing it.
Santander UK, in addition to Barclays and NatWest Group, was a member of the BSB.
According to Anna Roughley, the director of insight for the Lending Standards Board, financial services firms that register with the LSB demonstrate their dedication to ensuring positive customer outcomes in situations involving elevated customer risk or lack of statutory regulation.
We collaborate extensively with regulatory bodies and our registered companies to facilitate essential enhancements in customer outcomes and to guarantee that our Standards and Codes contribute positively to the broader regulatory landscape in the United Kingdom.
In its letter to the LSB, Santander UK emphasised that its withdrawal “in no way signifies any intention to diminish the level of consumer protection we offer; on the contrary, the exact opposite is true.”
