The Canons of Lending

1. Unit 10 The Canons of Lending Facilitator Support Materials for The Canons of Lending

2. Unit Aim In this unit the learner will be introduced to the various factors to be taken into consideration when assessing personal lending propositions. This unit is 20 Guided Learning Hours

3. Unit Description The learners studying this unit will gain knowledge and understanding appropriate to lending money in the banking sector. Learners will investigate what factors a bank would take into account when considering lending to an individual. Once the factors have been established, then learners will learn a consistent and structured approach to assessing lending propositions.

4. Unit Description Continued • Learners will then investigate the main features of a variety of lending services. This will enable them to identify the appropriate lending service for individual customers when working in the sector. • Finally, in the unit, learners will look at the rationale for setting conditions to lending and how the bank may apply these to different circumstances.

5. Learning Outcome 1: Understand the factors to be taken into account when assessing personal lending propositions Amplification of the Learning Outcome: Factors:person’s character, capacity, commitment/capital; amount; loan to value; purpose; term; repayment; security; marital status; dependants; employment; previous connections with the lending organisation; customer’s assets and liabilities; viability; fees and interest

6. Assessment Criteria for Learning Outcome 1 Assessment Criteria: 1.1 Explain the factors to be taken into account when assessing personal lending propositions Open discussion with Learners

7. Learning Outcome 2: Be able to adopt a consistent and structured approach to the assessment of lending propositions Amplification of the Learning Outcome: Consistent and structured approach: eg CAMPARI

8. Assessment Criteria for Learning Outcome 2 Assessment Criteria: 2.1 Apply the canons of lending to given lending propositions Open discussion with Learners

9. Learning Outcome 3: Understand the main features of lending services Amplification of the Learning Outcome: Lending services: overdrafts; personal loans; revolving credit; credit cards; house purchase loans; capital release loans; bridging loans; term loans; self build loans; hire purchase; leasing

10. Assessment Criteria for Learning Outcome 3 Assessment Criteria: 3.1 Explain the main features of lending services Open discussion with Learners

11. Learning Outcome 4: Understand the rationale for setting conditions for a loan Amplification of the Learning Outcome: • Rationale: conditions or covenants that a lender will place on a customer eg covenant to repay, covenant re: security • Offer or Facility letter: reasoning behind the more common clauses eg set off, security, use of facility and time limit for acceptance of offer

12. Assessment Criteria for Learning Outcome 4 Assessment Criteria: • 4.1 Explain the rationale for setting conditions for a loan • Open discussion with Learners • 4.2 Draft an offer or a facility letter • Open discussion with Learners

13. Appropriate Books Retail Banking, Book One (England and Wales), chapter; The Principles of Lending — the Canons of Lending, pages, 158-208 Retail Banking, Book One (England and Wales) , chapter; The Principles of Lending — Other Considerations, pages, 212-219 Retail Banking, Book One (England and Wales), chapter; Lending Products, pages, 226-238

14. Appropriate websites www.bankofengland.co.uk www.bba.org.uk/bba/jsp/polopoly.jsp;jsessionid=az3XEMccpMo_?d=103 www.fsa.gov.uk www.hm-treasury.gov.uk www.projects.exeter.ac.uk/RDavies/arian/origins.html