Santander is reportedly withdrawing its membership from the Lending Standards Board (LSB) over concerns about the duplication of regulatory standards in the UK market.

A report by Sky News said that Santander UK gave notice to the lending standards body last week because some of the non-profit's voluntary rules clash with the Financial Conduct Authority's mandatory Consumer Duty and the Payment Systems Regulator’s upcoming APP fraud reimbursement scheme, which will make it obligatory for banks and payment services providers to compensate victims.

In a letter seen by the news website, Santander told the organisation that these regulations “supersede the existing voluntary industry standards that are set out in the current LSB codes”.

It went on to say that this "inevitably leads to duplicative regulation and can create confusion among staff and customers about which standards apply.”

The bank said that quitting the standards body would mean “more certainty and confidence” over the current regulatory environment and reduce duplicate effort to allow it to "concentrate resources on other important customer and regulatory priorities”.

The move could mark a the beginning of wave of other withdrawals, with industry sources telling Sky News that several other major banks could soon be following suit.

“The Business Standards are truly unique in the UK, provide the only protections of their kind to UK SMEs, and are recognised by the FCA," said Anna Roughley, head of insight, LSB. "Firms not signed up to the business Standards cannot offer SMEs the same protections as registered firms because they are not held independently accountable in their treatment of customers.

"Meanwhile, the Personal Standards have pioneered lending protections for consumers, and we have already announced a consultation to assess the future of these Standards in a careful manner, with a priority placed on protecting consumers."

---