FCA imposes £26M fine on Barclays for mistreatment of financially distressed customers
The UK Financial Conduct Authority (FCA) today announces the imposition of a £26 million fine on Barclays Bank UK PLC, Barclays Bank PLC and Clydesdale Financial Services Limited. The penalties stem from Barclays’ failures in relation to their treatment of consumer credit customers who fell into arrears or experienced financial difficulties.
Barclays has pro-actively redressed these customers, paying over £273 million to at least 1,530,000 customer accounts since 2017. The redress program is close to completion.
Between April 2014 and December 2018 some retail and small business customers 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.
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
- failed to properly understand customers’ circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions
The FCA 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, 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. The FCA has monitored this program.
The regulator took the redress program into account when determining 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 £37,223,500.