BETTER COMMUNICATION WITH CUSTOMERS DELIVERS ECONOMIC BOOST SAYS ANNUAL REPORT INTO BANKING APPEALS PROCESSES
Improvements to banks’ appeal processes over the last six years have delivered a £100 million boost to the economy, according to the latest annual report into the appeals system published by Professor Russel Griggs today.
As at March 2017, there had been almost 19,500 appeals over the six years in which the review has been ongoing. Overall, 31.4 per cent had been overturned, with the proportion decreasing significantly from 39.5 per cent in 2011 to 28.7 per cent in the twelve months to March.
Professor Griggs identifies the increasing levels of communication between banks and their customers, leading to better advice and guidance for applicants as the driver of these improvements. Banks increasingly use telephone consultations, alongside face-to-face meetings and digital technology, as an easy way for SMEs to talk through issues with dedicated advisers. Necessary changes to business planning and/or financial practices can therefore be made before a loan application is formally approved or declined.
Publishing his sixth annual report into banking appeals processes today, Independent External Reviewer to the Appeals Process Professor Griggs said:
“SMEs need faith in their banks and vice versa, and effective interaction is the key to building trust. Process changes that all the banks have made to enable them to listen to and advise customers more effectively have resulted in greatly decreasing numbers of initial declines that are then overturned.
“Much of that reduction has come from the banks putting in their own ‘refer’ processes which allow them to look again at a proposal before declining it. The result is that many are not declined, or are discussed further with the customer before a final conclusion.
“These process enhancements have impacted on the amount of lending to SMEs in real terms. I conservatively estimate that well in excess of £100 million has been put back into the economy by the Appeals Process over the last 6 years.”
According to the report the following developments, introduced over the last twelve months, have also helped improve the appeals landscape:
- In November 2016, the mandatory referral process as set out in the Small Business, Enterprise and Employment Act 2015 was implemented, meaning that the main UK banks now give customers the option to be referred to one of four finance portals that have been put in place.
- The Lending Standards Board launched the Standards of Lending Practice specifically for SMEs in July 2017.
- The EU has agreed a new protocol on how lending declines should be handled. The UK, through the work of the Appeals Process and other initiatives, will stand as an exemplar of best practice for other European nations thanks to the improvements that have been driven forward by Professor Grigg’s independent review.
Professor Griggs also cites the increasingly diverse and competitive lending market, with the increasing availability of peer-to-peer lenders, finance portals, and online providers for vehicle finance as positive developments for SMEs seeking to raise finance capital.
The latest report can be accessed below.
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Click here to view the quarterly report Period to End December 2014 ››
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