Just weeks after being fined for unlawful marketing practices Vanquis Bank has been ordered to pay its customers almost £169m in compensation – as well as a £2m fine – after failing to properly disclose charges on one of its popular repayment plans.
The Financial Conduct Authority has ruled that Vanquis, a division of Provident Financial, failed to inform customers who took out its Repayment Option Plan (ROP) that they would be charged interest unless the balance was cleared at the end of the month.
The service, which has been offered to all customers since June 2003, is designed to help those struggling to pay their bills. The product allows customers to freeze their account, take a payment holiday and avoid late fees for one month a year.
But the FCA found that while Vanquis told customers how the product worked and what the monthly charge would be, it did not tell them that interest would also be added.
In its investigation, the regulator found that although the firms sales agents explained what the monthly cost was – either £1.29 or £1.19 per £100 of a customer’s outstanding balance – they failed to explain that the add-on would attract interest at the card rate unless the balance was paid in full.
FCA director of enforcement Mark Steward said: “Vanquis failed to make sure customers were informed about the full cost of the ROP when it was offered. Most Vanquis customers chose the ROP to help manage their credit without realising instead that the product might lead to their indebtedness increasing.
“Customers are entitled to be told all relevant information when being offered financial products. These were very serious breaches.
“Vanquis has decided now to do the right thing by acknowledging the wrong-doing and offering to compensate its customers.”
The FCA added that customers who took out the product do not need to do anything to claim compensation as they will be contacted directly by Vanquis in “due course”, to explain how they’ll be refunded. The firm has around 1.7 million customers.
Late last year, Vanquis was fined £75,000 by the Information Commissioner’s Office after being found guilty of sending hundreds of thousands of texts and emails to promote its credit cards without first gaining proper consent.
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