The Financial Conduct Authority (FCA) has fined Barclays Bank UK, Barclays Bank and Clydesdale Financial Services £26 million for failures in relation to their treatment of consumer credit customers who fell into arrears or experienced financial difficulties.
Barclays failed to follow its customers’ contact policies for customers who fell into arrears and failed to have appropriate conversations with customers to help understand the reasons for the arrears.
It also failed to properly understand customers’ circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions.
The FCA requires consumer credit firms to take adequate measures to properly understand customers’ financial difficulties. It also requires firms to show forbearance and due consideration to customers in arrears or in financial difficulties. Otherwise, a customer under financial pressures could end up making payments on a consumer credit loan at the expense of a priority debt, such as a mortgage, council tax, child support and utility bills.
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 regulator noted that Barclays has pro-actively redressed these customers, paying over £273 million to at least 1,530,000 customer accounts since 2017. The redress programme is close to completion.
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 £37,223,500.
Mark Steward, executive director of enforcement and market oversight at the FCA, 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. We will take action against unfair treatment, or where firm systems expose customers to the risk of unfairness. While this case predates the pandemic, this message is especially important as the impact of coronavirus continues to affect household incomes and budgets.”
