Lending to personal customers and consumer lending, demands a high-level of skill in the assessment of individual lending proposals. In many cases it has none of the sources of financial information traditionally associated with Corporate Lending to Balance Sheets and Profit & Loss Accounts etc. It relies more on the trust and rapport built up between the customer and the lender.

By the end of this course lenders to Personal Customers will be able to:

• Understand the process for assessing lending propositions from Personal Customers

• Utilise that process to come to a logical decision to agree to the loan or to decline it with robust reasons

• Manage and control a Personal Lending portfolio to ensure, as far as possible, that all loans are repaid in full. (Remembering that there is no completely risk-free lending!)

• Build rapport with customers to (try to!) ensure that all their loans are fully repaid

Session 1:

Analysis of Personal Lending propositions

• What information must customers provide to us?

• What extra information should customers provide to us?

• How do we analyse that information to check its authenticity?

• Campari as a mnemonic for analysing Personal Lending propositions

• Character: what do we know of the customer – for instance their track record with the bank and previous loan history

• Ability: where are the repayments coming from – what “spare” cash does the customer have to finance loan repayment?

• Margin: what is the correct interest rate for the lending – this is the “rent” that we are asking the customer to pay for our money and will reflect the appropriate degree of risk

• Purpose: why does the customer want the loan – are they buying / financing a purchase that is acceptable to the bank and is the repayment period appropriate for this type of purchase?

• Amount: how much does the customer want to borrow – are they contributing anything to the purchase prices or is the bank being asking to lend 100%?

• Repayment: what is the repayment schedule – will the customer be able to maintain these payments for the duration of the loan?

• Insurance: what security (collateral) would we expect to be offered – how easy will it be to prefect this security giving the bank the “Insurance” it wants?

Session 2:

Interaction between Lender and Customer

• Understanding behaviours;

• How is our behaviour developed by previous interactions (both inside and outside the bank)?

• How is our customer’s behaviour also developed by many interactions

• How can we ensure that we understand customers’ behaviours and, just as importantly, they understand ours?

• Effective Communication;

• What do we mean by Effective Communication?

• How is Effective Communication affected by first impressions?

• How is Effective Communication affected by different modes of communication: face-to-face / audio/e-mail/etc.

• Building (and maintaining) rapport;

• Understanding Emotional Intelligence in building (and retaining) rapport with customers – and, coincidentally, with colleagues

• Using Goleman’s 5 steps to Emotional Intelligence in customer interactions;

• Self-Awareness

• Self-Management

• Motivation

• Empathy

• Social Skills;

• The levels of rapport – and how we achieve them

• The Berne model of communication – and its link to rapport

• Interview techniques;

• Getting the right information

• Checking the accuracy of that information in discussions

• Challenging ambiguities (or information that seems to be incorrect)

• Asking for alternatives / Offering alternatives

• Effective Listening techniques

Session 3:

Making the decision

• How do we arrive at the correct decision?

• Balancing “pros” and “cons”

• Re-analysing the CAMPARI information then

• Structuring the lending;

• Setting up the loan to meet the optimal “shape” of the loan

• Optimal to the bank

• Optimal to the customer

• Creating the appropriate documents and getting them signed before advancing the money

• Insurance;

• What security does the bank think is appropriate for this lending?

• Is the bank prepared to lend unsecured?

• Why not?

• What security does the customer have to offer?

• How does the bank perfect the security to ensure that it is adequately protected in the event of default?

• Getting Repaid;

• Setting up the appropriate monitoring process for the loan to ensure that repayment is always (as near as possible) on schedule

• What actions do we need to take if the repayment deviate from the agreed schedule

• At what stage do we start to worry?

Session 4:

Monitoring the Lending Portfolio

• What regular monitoring processes should the bank have in place across the entire Lending Portfolio?

• What are the early-warning signs that the bank should be looking for?

• At what stage do these early warning signs actually mean that the loans are out-of-order?

• How does the bank communicate with the customer now that the lending is not performing as agreed (and expected!)?

• How must that communication process change from the initial communication when the loan was being discussed?

• Revised Interview Techniques

• Negotiation Skills;

• What are the steps required to “negotiate” with the customer to get the best possible solution, both for the customer and for the bank…?

• Understanding the IVCs (Inexpensive Valuable Concessions) and WAPs (Walk Away Positions) available to the bank in arriving at an agreement

Session 5:

Bad and Doubtful Debts

• How does the bank decide that a loan is now “Bad”?

• What are the steps required now in trying to achieve repayment?

• What has changed now with information in the original CAMPARI assessment?

• What is the current CAMPARI assessment?

• How can the bank learn from previous assessments which, with the benefit of hindsight, turn out to have been incorrect?

• How should the bank re-schedule the loan agreement?

• When should the bank begin to realise its security?

• What legal recourse does the bank have in “forcing” the customer to repay…?

(Optional) Session 6:

The course can also include the analysis and decision making for small business lending for sole traders, partnerships and unincorporated entities

• Including the assessment of the more-traditional sources of financial information through Balance Sheets, Profit & Loss Accounts, and Financial Forecasts

Course Close