Earlier this year, we launched the Good Practice Lending Guide – a comprehensive, free resource designed to support community finance organisations in their approach to credit risk management.
This guide isn’t just a theoretical framework—it’s a hands-on tool filled with real-world examples to help you apply best practices in day-to-day operations. Covering everything from governance and compliance to the essential processes of running a lending business, we hope any organisation in the community finance space finds it a valuable resource.
The Guide has been created in conjunction with our partner Jaywing, who have contributed their extensive expertise in best practice for managing retail lending and credit risk.
Why we created the guide and how it can help you
Running a community finance organisation comes with its challenges, often working with limited resources while navigating an increasingly complex regulatory environment and with ongoing external pressures—whether it’s rising interest rates, a cost-of-living crisis, or shifting technology.
The recent “Dear CRO/CEO” letters from the PRA[1] [2], highlighted that being a small or not-for-profit firm does not detract from a firm’s requirement to have robust credit risk management frameworks in place, albeit ones proportional to the size and complexity of the firm’s business.
Which is why we created the Good Practice Lending Guide. It provides straightforward, practical guidance to help you manage risk, improve efficiency, and ensure regulatory compliance.
What’s in the Guide?
The Good Practice Lending Guide is split into 15 modules, each focusing on a different aspect of credit risk management. These include everything from high-level strategies like credit risk appetite and governance, to more operational topics like lending policies, affordability assessments, arrears management, and the new Consumer Duty requirements.
The guide can be used flexibly. Each module stands alone, so you can dive straight into the area that’s most relevant to you without needing to work through the entire document. And when topics overlap, we’ve cross-referenced the relevant sections to provide a seamless learning experience.
It’s not just about theory – each module is designed to be practical and actionable, so you can start implementing changes and improvements immediately.
Where we’re going next
The feedback since our launch has been overwhelmingly positive. As Karen Bennet CBE, CEO of Enterprise Credit Union Ltd, put it: “…the Good Practice Lending Guide is fantastic, thank you so much, lots of learning for us moving forward. Superb.”
We see the Good Practice Lending Guide as just the beginning. Our aim is to continue supporting the community finance sector with practical tools and resources that help firms operate more effectively. That’s why we’re planning a series of free workshops and webinars to dive deeper into key topics from the guide.
But we want to hear from you! To ensure our next steps meet your needs, we’re asking for your input on the areas you’d like us to cover. Below are four topics we’re considering for future learning sessions. Please take a moment to complete our quick survey and let us know which would be most valuable for you – fill in the form below.
Your options:
- Lending Policy Risk (RM4)
This module explains how to develop a lending policy that aligns with your organisation’s risk appetite, combining human underwriting, credit scoring and policy rules to assess creditworthiness. - Portfolio MI (RM10)
Learn about the reporting needed to monitor business performance and support governance, strategic, and operational decisions. - Arrears and Collections Strategy (RM11)
Get practical guidance on how to support customers facing financial difficulties, covering the full arrears lifecycle from pre-delinquency to post-write-off recovery. - Governance (RM13)
This module covers the governance frameworks necessary to ensure strong oversight and accountability, including how often meetings should take place and who should be involved.
What’s next for you?
We hope that through sharing knowledge and fostering collaboration, the Good Practice Lending Guide becomes a dynamic, practical resource for the community finance sector. If you have any questions, feedback, or suggestions on the guide, please don’t hesitate to reach out at hello@fair4allfinance.org.uk.
[1] PRA (2024) Thematic findings of Internal Audit Review of the Credit Risk Management Framework – non-systemic UK Deposit Takers (UKDT) (bankofengland.co.uk) Accessed 10th September 2024.
[2] PRA (2023) Prudential Regulation Authority (PRA) Annual Assessment of the Credit Union Sector – Peer Group 4B (bankofengland.co.uk) Accessed 11th September 2024
