The Financial Conduct Authority (FCA) has fined Barclays £26 million for failures in relation to its treatment of consumer credit customers who experienced financial difficulties.
The fine acts as a warning for those finance firms lending during the pandemic when consumers are under increased financial pressure.
The FCA introduced payment holidays for motor finance customers during the lockdowns in the UK this year and firms were asked to work with customers that were experiencing financial difficulties.
The FCA said Barclays has pro-actively redressed these customers, paying over £273m to at least 1,530,000 customer accounts since 2017. The redress programme is close to completion.
Mark Steward, FCA executive director of enforcement and market oversight, said: “Consumers should feel reassured that their lender will work with them to help resolve any financial difficulties, whereas Barclays’s poor treatment of its customers risked making these difficulties worse.
“Firms must treat consumer credit customers fairly, including when they find themselves in arrears.”
Steward said the FCA will take action against unfair treatment, or where firm systems “expose customers to the risk of unfairness”.
He added: “While this case predates the pandemic, this message is especially important as the impact of coronavirus continues to affect household incomes and budgets.”
Between April 2014 and December 2018 some retail and small business customers who had been offered consumer credit were treated poorly when they fell into arrears.
The FCA found that Barclays failed to follow its customers’ contact policies for customers who fell into arrears, it failed to have appropriate conversations with customers to help understand the reasons for the arrears and failed to properly understand customers’ circumstances leading it to offer “unaffordable, or unsustainable, forbearance solutions”.
Barclays identified some of the problems as early as 2014, but due to systems and controls failings these were not fully rectified.
Adequate measures to resolve the problems were subsequently taken.
Barclays has contacted all customers whom they think may be due for compensation. The FCA has monitored this programme.
The FCA took the redress programme into account when setting its fine.
Barclays did not dispute the FCA’s findings and agreed to settle the case.
As a result, they qualified for a 30% discount and the financial penalty would otherwise have been £37.2m.