Barclays Bank has been whacked with a £26m fine for huge failings in its treatment of consumer credit customers who fell into arrears or experienced financial difficulties.
The Financial Conduct Authority penalty, which also covers Barclays-owned Clydesdale Financial Services, follows an investigation which revealed that between April 2014 and December 2018 customers who had been offered consumer credit were treated poorly when they fell into arrears.
They included people whose loved ones had died, who were not given sustainable or affordable debt repayment plans.
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; and failed to properly understand customers’ circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions.
The FCA said Barclays knew about many of the shortcomings in its systems and controls as early as 2013, but failed to adequately resolve them until late 2018.
FCA executive director of enforcement and market oversight Mark Steward 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.”
The FCA requires consumer credit firms to take adequate measures to properly understand customers’ financial difficulties. It also requires firms to show 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.
The bank has since compensated those affected, paying over £273m to 1.53 million customer accounts since 2017. The FCA took this 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 £37m.
The FCA recognises the challenges firms face in this area due to Covid-19, which only heightens the importance of firms treating customers in financial difficulty fairly and appropriately.
In response, a Barclays spokeswoman said: “Barclays is a responsible lender and we strive to achieve good outcomes for our customers. We would like to apologise to those customers for not providing the level of service we should have.”
She added that the bank had made changes to its systems, processes, and training to correct the issues and that “the vast majority of customers who were impacted have already been contacted”.
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