Researchers investigate how a code of practice may enable better consumer outcomes
24 February 2025: A new report by the University of Edinburgh’s Credit Research Centre covers the potential for a new code of practice to protect consumers, especially those who are vulnerable, excluded or underserved.
Read the foreword by"Developing Standardised Measures for Consumer Duty Compliance, Affordability and Competitiveness in Consumer Lending,” sets out findings from a scoping study and areas for further analysis and development. It draws on interviews with stakeholders and was commissioned by Salad Holdings as part of a research project to contribute to achieving better consumer outcomes.
The research seeks to address issues raised in 2024 by the Financial Conduct Authority (FCA) regarding adherence to Consumer Duty requirements. In a joint foreword to the scoping report, Lord McNicol (Non-Executive Director, Salad Holdings) and Alan Campbell (Founder, Salad Holdings) write:
"Adopting and reporting on a code of practice would provide transparency, catalyse accountability, and demonstrate to investors that responsible lenders have lower business risks and are worthy of investment. Such transparency, standardisation and investment readiness would also support the Government’s call to ensure regulators and regulations support growth."
The report sets the foundation for a broader analysis to be undertaken by Edinburgh’s researchers. Salad is encouraging other lenders and stakeholders to participate in the next phase of this work, so the researchers can develop and test robust, objective metrics for compliance, affordability and competitiveness which could be reported on as part of a voluntary “Edinburgh Score.”
Read the report here: Developing Standardised Measures for Consumer Duty Compliance, Affordability and Competitiveness in Consumer Lending
Read the foreword by Alan Campbell, Founder, Salad Holdings and Lord McNicol, Non-Executive Director, Salad Holdings:
Salad Holdings* commissioned this independent scoping report to contribute to achieving better consumer outcomes.
We commend the Financial Conduct Authority (FCA) for setting out the standard it expects lenders to reach in protecting consumers, especially those who are vulnerable, excluded or underserved, when it wrote to Chief Executives of consumer lending firms in March 2024. Its letter covered three key areas:
• reducing and preventing serious harm
• setting and testing higher standards
• promoting competition and positive change.
The FCA recognised that vulnerable consumers are “price takers” and placed an obligation on lenders to be “price makers” on such consumers’ behalf. This puts a Duty of Care on lenders to ensure their products are competitive and affordable.
Salad Holdings invited researchers from the University of Edinburgh Business School to develop a framework for a voluntary code of practice that responsible lenders could adopt and report against. The researchers’ work follows an established methodology for developing new compliance scores.
This report covers the potential to develop standardised testing for Consumer Duty compliance. It sets out findings from a scoping study and areas for further analysis and development. It draws on interviews with stakeholders, including the FCA.
Adopting and reporting on a code of practice would provide transparency, catalyse accountability among lenders and demonstrate to investors that responsible lenders have lower business risks and are worthy of investment.
Such transparency, standardisation and investment readiness would also support the Government’s call to ensure regulators and regulations support growth.
Salad Money will provide raw data for the researchers’ use. We encourage other lenders to do the same, and, alongside stakeholders, participate in the next phase of Edinburgh’s work.
With the active involvement of lenders and stakeholders, Edinburgh’s researchers can develop and test robust, objective metrics for compliance, affordability and competitiveness. They can incorporate credit and open banking data to create a uniquely detailed overview of consumer outcomes to be reported on as part of a voluntary “Edinburgh Score.”
Read the report here: Developing Standardised Measures for Consumer Duty Compliance, Affordability and Competitiveness in Consumer Lending