Moneybarn has revealed to Credit Strategy how the lender has compensated customers, after the Financial Conduct Authority (FCA) announced a fine of £2.77m on the car finance provider over historic deficiencies in its forbearance processes.
The regulator found that Moneybarn did not communicate the likely financial consequences of failing to keep up with payments to customers in a way which was “clear, fair and not misleading” for the period between April 2014 and October 2017.
More than 1,400 customers – many of whom were vulnerable - subsequently defaulted after entering into unsustainable short-term repayment plans.
Responding to the findings, Moneybarn said it has identified all 5,933 customers potentially affected customers and completed a full redress programme of £30m during 2019.
Moneybarn did not dispute the FCA’s findings. The firm’s agreement to accept the FCA’s findings meant it qualified for a 30 percent discount in addition to the credit it received for the redress paid to customers. Otherwise, the FCA would have imposed a financial penalty of at least £3.9m.
Shamus Hodgson, managing director of Moneybarn, commented: “Throughout the investigation we worked collaboratively with the FCA. We are happy that all customers potentially affected by these findings have been fully compensated for any detriment they might have suffered.
“The processes we have had in place since 2017 are clear, effective, and appropriate. The FCA has clarified its expectations of lenders in these important aspects of customer treatment, which will provide guidance for all finance companies within the motor industry. As market leaders in this area, we’re proud to set an example for others in the industry to follow."
The FCA’s Jonathan Davidson will give a regulatory update at the Credit Summit 2020 on March 19. To book your place, visit the Credit Summit website.