Atom Bank is committed to the Standards of Lending Practice

Atom Bank, a UK-based neobank, is committed to standards of lending practices for business customers, aimed at protecting small and medium-sized businesses.

Overseen by the Lending Standards Board (LSB), the Standards of Lending Practice (SLP) covers loans, credit cards, charge cards and overdrafts, providing a distinct set of standards for asset financing.

The achievement of full SLP registration came after a period of “provisional” status, during which Atom worked with the LSB to perform an end-to-end analysis of their existing policies, processes and procedures to verify that met the standards of their SLP.

With customers at the heart of Atom bank’s business, it operates on the basis that small business lending should be held to the highest standards of rigor and scrutiny. Registration with the LSB further confirms this commitment to treating customers fairly and delivering responsible lending results throughout the product lifecycle.

It will also allow Atom to gain insights from consumer groups, debt counseling organizations and other industry stakeholders who work with the LSB, identify new areas of harm to customers and to share practices with other companies.

What is the Lending Standards Council?

The LSB promotes fair outcomes for clients within financial services through independent oversight. They do this by requiring banks and registered lenders to operate under the criteria set out in their voluntary SLP.

The SLP set the benchmark for business lending, outlining how lenders are expected to deal with customers throughout product development. The standards are designed to work alongside the Financial Conduct Authority (FCA), covering areas that statutory regulation does not cover.

The Standards of Lending Practice for Business Clients provides protections for Small and Medium Enterprises (SMEs) with a consolidated turnover of up to £25 million for Loan, Commercial Mortgage, Overdraft and credit card.

Helping SMEs

According to the Federation of Small Businesses, SMEs are an important part of the UK economy. There are approximately 5.4 million SMEs in the UK which together employ 24.3 million people and account for 99% of all UK businesses. They account for around 60% of employment and around 50% of the total revenue of private companies.

Despite this, many SMEs often face rather intractable problems in accessing finance. Bank credit represents 85% of the outstanding debt of SMEs. When SMEs seek loans, the majority only consider one bank – usually their checking account provider. Therefore, the chances of being rejected are more than 50% higher when applying to a new supplier. This helps explain why the majority of loans to date have been made by large banks.

A lack of diversity among lenders can further amplify the business cycle if traditional lenders behave similarly.