The BBRS welcomes the Lending Standards Board (LSB) recommendations to strengthen protections for business banking customers committing to a Personal Guarantee.

The BBRS’s Chief Adjudicator, Sally Berlin, worked closely with the LSB, providing insights from BBRS’ case work to help inform their policy review.

Issues associated with Personal Guarantees, when relied on by a bank, feature commonly in cases registered with the BBRS, alongside loans, property valuations, inadequate fraud protections, administration and account closures.

The key changes on LSB’s Personal Guarantee guidance will be:

• A new requirement for lenders to provide guarantors with annual reminders that a Personal Guarantee remains in place.
• Updates to the requirements for lenders on advising potential guarantors of the need to seek independent legal advice about whether becoming a guarantor is the right choice for them.
• Enhanced guidance for lenders on providing information to a guarantor about how the Personal Guarantee will function and their obligations under it.

These changes will be made to the Standards of Lending Practice for Business Customers and will come into effect from September 2025. You can read the LSB’s statement in full on their website.

Separately, the BBRS has shared its experience with the Financial Conduct Authority which is also conducting research into the use of Personal Guarantees.

Laura Mahoney, Head of Policy at the LSB, said: “Personal Guarantees have the potential to have a significant impact on guarantors, so it’s really important that their interests are protected when a guarantee is in use.

“While updating the Standards, we’ve also considered the important role that guarantees can play in helping SMEs access the finance they need, quickly. We’ve sought to add protections for SMEs and guarantors at the same time as avoiding adding friction to the lending journey that could leave SMEs facing worse outcomes because they can’t access crucial funding.”

On the BBRS’s contribution to these increased protections, BBRS’s Chief Adjudicator Sally Berlin said:

“I am pleased that BBRS insights have helped to inform the LSB’s review of these lending standards in respect of Personal Guarantees.

We believe that improving communication around Personal Guarantees will help reduce unresolved banking complaints for our customer base.

As the BBRS approaches the end of its time resolving active complaints we hope that our experience and learning will improve business banking practice and restore trust amongst SMEs. Strengthening protections for customers with Personal Guarantees will be key to delivering trust in the SME sector.

Ends.

Notes to editors

A Personal Guarantee is where a guarantor, typically a company director, agrees to be held personally liable for a business loan.

The LSB is the primary self-regulatory body for the banking and lending industry. Some of the largest personal and business lenders in the UK are signed up to the LSB’s Standards and Codes, including BBRS’s seven participating banks.

The LSB found that:

• Issues with guarantees among the LSB’s registered firms are rare. Lenders typically only call on these guarantees as a last resort, and there are very few complaints about their use.
• There was scope to improve how lenders communicate with guarantors about how guarantees work and their potential impact, and to ensure lenders keep up-to-date information about a Personal Guarantee.
• Where there are issues, it’s typically where a guarantor doesn’t realise they are still liable for a guarantee after they’ve left or sold a business. The updated Standards reduce the chances of this happening.

The BBRS is independent both from the SMEs who bring us their complaints and the banks they are raising the complaints against. All recommendations arising from BBRS’ learnings and recommendations are impartial.