FCA Imposes £26 Million Penalty Against Barclays for Unfair Treatment of Customers
UK's Financial Conduct Authority (FCA) announced that it has imposed £26 million penalty against Barclays Bank UK PLC, Barclays Bank PLC and Clydesdale Financial Services Limited (Barclays) for failures in treating fairly consumer credit customers who fell into arrears or experienced financial difficulties.
Between April 2014 and December 2018, some retail and small business customers of Barclays who had been offered consumer credit were treated poorly when they fell into arrears. The regulator found that Barclays failed to treat customers fairly or to act with due skill, care and diligence.
Specifically, Barclays:
· failed to follow its customers' contact policies for customers who fell into arrears
· failed to have appropriate conversations with customers to help understand the reasons for the arrears
· failed to properly understand customers' circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions
Mark Steward, Executive Director of Enforcement and Market Oversight, said: "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."
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 has pro-actively redressed these customers, paying over £273 million to at least 1,530,000 customer accounts since 2017. The redress programme is now 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.
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