The United Kingdom’s Financial Conduct Authority (FCA) ) has slapped a fine of £26 million on three Barclays entities, Barclays Bank UK PLC, Barclays Bank PLC, and Clydesdale Financial Services Limited, for mistreating financially struggling consumers.
The regulator detailed that the banking giant poorly treated some retail and small business customers when they fell into arrears between April 2014 and December 2018 after receiving consumer credits.
Barclays was aware of the financial situation of the stressed customers since 2014 but failed to rectify anything due to 'systems and controls failures'. However, the bank resolved the problems subsequently under the FCA’s monitoring.
Since 2017, the bank redressed at least 1,530,000 customer accounts, paying over £273 million.
Creditors Need to Be Moral
The penalty came as the financial market regulator needs the consumer credit firms to take adequate measures to properly understand their customer credit difficulties. It further requires the firms to be lenient to the financially stressed customers.
“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,” Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight, said.
Barclays pro-actively started the redressing program and did not object to the FCA’s heavy fine. The unquestioned acceptance of the penalty gave the bank a 30 percent discount, otherwise, the penalty amount could have gone up to £37.2 million.
“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,” Steward added.
