The Financial Conduct Authority (FCA) has fined Barclays Bank UK, Barclays Bank PLC and Clydesdale Financial Services (also part of Barclays) £26m, for failures in their treatment of consumer credit customers in arrears or financial difficulty.
Barclays has pro-actively redressed these customers, paying over £273m to at least 1,530,000 customer accounts since 2017. The redress programme is close to completion.
In publicising the fine, the FCA said the fair and appropriate treatment of customers experiencing financial difficulty remains a focus and it is working to ensure firms “raise their standards in this area”.
The regulator warned: “Firms should ensure there is appropriate investment in their staff who work in collections and recoveries, including in training and effective management information, to allow firms to monitor customer outcomes and take appropriate action where needed.”
Mark Steward, executive director of enforcement and market oversight at the FCA, 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.”
Credit Strategy reported exclusively back in July that the FCA’s investigation into Barclays’ collections and recoveries controls was at "an advanced stage."
The FCA’s fine today reveals what it was investigating. It shows that 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 FCA found that Barclays failed to treat customers fairly or to act with due skill, care and diligence.
The FCA said Barclays:
The watchdog said it 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, it warned, 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 identified some of the problems as early as 2014, but due to systems and controls failings, these were "not fully rectified". Adequate measures to resolve the problems were subsequently taken.
Barclays has contacted all customers whom they think may be due for compensation and the FCA is monitoring this programme.
The FCA took the redress programme into account when setting its fine. Barclays did not dispute the FCA’s findings and agreed to settle. As a result, the bank qualified for a 30% discount and the financial penalty would otherwise have been more than £37m.
A spokesperson for Barclays said: “Barclays is a responsible lender and we strive to achieve good outcomes for our customers. Since the issue was first identified, we have implemented a number of changes to our customer journeys, systems, processes and colleague training to correct it, and the vast majority of customers who were impacted have already been contacted.
"We would like to apologise to those customers for not providing the level of service we should have.”
Barclays added that the FCA has confirmed adequate measures to resolve the problems have been taken.