The Financial Conduct Authority (FCA) fined Barclays Bank UK PLC, Barclays Bank and Clydesdale Financial Services for failures in relation to its treatment of customers in arrears or financial difficulty.
At least 1,530,000 customers have been affected since 2017 and the redress programme is close to completion.
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’s 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.”
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.
The regulator said Barclays:
• failed to follow its customers’ contact policies for those 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 said without proper care, 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.
Barclays has contacted all customers whom it thinks may be due for compensation.
The fine qualified for a 30 per cent discount as the financial penalty would otherwise have been £37,223,500.
The regulator added: “The FCA recognises the challenges firms face in this area due to coronavirus (Covid-19), which only heightens the importance of firms treating customers in financial difficulty fairly and appropriately.”