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CCR2 Affordability Assessments & Vulnerability


Taking ownership of the vulnerability question


With the growing prevalence of small, owner-run businesses, it may be time to consider extending the vulnerability debate


Saima Hansraj


Compliance manager, the Lending Standards Board SaimaHansraj@lstdb.org.uk


There is no doubt that 2016 was a significant year for the UK, creating a number of economic uncertainties, and with Brexit on the horizon, the impact of these events is still being determined.


The one thing that remains certain though is the role that small businesses continue to play in supporting the UK economy. Contributing to sustained growth in productivity and innovation, their role is significant and it is essential, therefore, that these businesses are given every opportunity to thrive.


Vulnerable as well?


The latest business population estimates for the UK, published by the Department of Business, Energy and Industrial Strategy provide a real insight into the size and scale of the everyday business.


In 2016, there were 1.3 million employing businesses and 4.2 million non-employing businesses, the latter giving rise to the single employee business, characterised by an increase in self-employment and a changing employment dynamic.


Whilst business owners have traditionally been thought of as self-sufficient, with greater bargaining power than the individual customer, these statistics demonstrate a stark reality. This prompts us to question, firstly, whether businesses should be treated any differently to an individual consuming products and services in a personal capacity and, secondly, in the same way that an


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individual may encounter vulnerability, can a business owner or employee similarly do so? After all businesses are people-led and run.


Narrow the gap


The answer to the first question is of course no. In fact, we should be working to narrow the gap between individual and business safeguards to afford protections to those businesses which really need it.


And the answer to the second question is a resounding yes! It is widely accepted that vulnerability is not a static state, limited to


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Whether engaging as a personal customer or a business, firms have a duty to offer the same level of support, to ensure that all customers are given the helping hand they need to cope with a difficult circumstance


a certain group of people, and that anyone can encounter a situation that might make them more susceptible to detriment. Factors such as mental and physical health, caring responsibilities, and life- changing events can put anyone in a vulnerable situation.


This is particularly the case where this affects a person’s ability to make, or communicate, an informed decision, or maintain existing financial commitments, and this experience is no different for an individual running a small business.


Equal support


Whether engaging as a personal customer or a business, firms have a duty to offer the same level of support, to ensure that all customers are given the helping hand they need to cope with a difficult circumstance. But is the impact always the same for


all businesses? Resilience is an important consideration here – we accept that not all businesses have the same needs, resources and capabilities, with some being more sophisticated than others, and this can vary based on factors such as the borrower type and size.


Practically, this means that the impact of a change in circumstances for one or two directors in a business can vary depending on the size and structure of the business, day-to-day management responsibilities (in particular, their position in the context of the business’ core operations), the impact


March 2017


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