FCA fines Barclays £26m for how the bank treated credit customers

Barclays has been slammed with a £26m fine after a City watchdog found that it treated consumer credit customers who experienced financial difficulties poorly.

The Financial Conduct Authority’s (FCA) has fined Barclays Bank UK PLC, Barclays Bank PLC and Clydesdale Financial Services Limited for the breach.

The issues the lender has been penalised for occurred between 2014 and 2018.

In essence, the bank failed to treat some retail and small business customers who had been offered consumer credit fairly when they fell into arrears, which is something that regulated firms are required to do.

Instead of taking special care to understand the customers’ circumstances, Barclays neglected to follow its own contact policies for customers who fell into arrears and to have proper conversations about their situation. The bank also failed to properly understand customers’ circumstances leading it to offer unaffordable or unsustainable forbearance solutions.

“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,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“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.”

Even though Barclays identified some of the problems as early as 2014, shortcomings in its systems and controls caused these issues to remain only partly rectified. Adequate measures to resolve the problems were subsequently taken. Barclays has contacted all customers whom they think may be due for compensation.

Barclays has pro-actively redressed these customers, paying over £273m to more than 1.53 million 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 over £37.22m.

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