Barclays fined £26m over remedy of consumers in monetary problem

The FCA found that Barclays did not treat customers fairly or did not act with due knowledge, care and diligence. Photo: Stephen Hird / Reuters

The UK Financial Regulator has fined Barclays (BCS) £ 26 million (US $ 34.7 million) for failing to deal with consumer credit customers who have defaulted or faced financial difficulties.

The Financial Conduct Authority (FCA) said Barclays had failed to follow its customers’ contact guidelines for customers who were in default.

In addition, Barclays did not have adequate discussions with customers to understand the reasons for the arrears.

It also found that Barclays did not properly understand the circumstances of customers, which resulted in prohibitive or unsustainable forbearance solutions being offered.

Between April 2014 and December 2018, some retail and small business customers who had been offered consumer credit were treated badly when they defaulted. The FCA found that Barclays did not treat customers fairly or did not act with due knowledge, care and diligence.

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The FCA urges consumer credit companies to take reasonable steps to properly understand customers’ financial difficulties. In addition, companies must show their customers forbearance and due consideration, retrospectively or in financial difficulties.

Otherwise, a customer under financial pressure could make payments on a consumer loan at the expense of a senior debt such as a mortgage, council tax, child support, and utility bills.

Barclays announced that these customers have proactively remedied the situation, paying more than £ 273 million to at least 1.5 million customer accounts since 2017. The corrective action program is nearing completion. The FCA oversaw this program.

The FCA said that Barclays identified some of the issues as early as 2014, but they have not been fully resolved due to system and control errors.

Mark Steward, FCA’s Executive Director, Enforcement and Market Supervision, said, “Consumers should feel confident that their lender will work with them to resolve financial difficulties, while Barclays’ mistreatment of its customers risks making those difficulties worse .

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“Businesses need to treat customers with consumer credit fairly, even if they are behind. We will take action against unfair treatment or when fixed systems expose customers to the risk of injustice. Although this case predates the pandemic, this reporting is especially important as the effects of the coronavirus continue to affect household incomes and budgets. “

A Barclays spokesperson said, “Barclays is a responsible lender and we strive to deliver good results for our customers.

“Since the problem was first identified, we’ve made a number of changes to our customer journeys, systems, processes, and training for colleagues to address it. The vast majority of affected customers have already been contacted.

“We would like to apologize to these customers for not providing the service we should have.”

The FCA said it took the legal protection program into account when setting the fine. Barclays did not deny the FCA’s findings and agreed to resolve the case. As a result, they qualified for a 30% discount and the financial penalty would otherwise have been more than £ 37 million.

The regulator said it “recognizes the challenges businesses face in this area due to COVID-19, which only adds to the importance of businesses treating customers in financial difficulties fairly and appropriately”.

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