Release Date: 15th December 2020
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined Barclays Bank UK PLC, Barclays Bank PLC, and Clydesdale Financial Services Limited (collectively referred to as Barclays) £26 million for their inadequate treatment of consumer credit customers who fell into arrears or experienced financial difficulties. These failures occurred between April 2014 and December 2018 and affected both retail and small business customers.
Barclays has already paid over £273 million in redress to at least 1,530,000 customer accounts since 2017, with the redress programme nearing completion. The FCA found that Barclays failed to treat customers fairly or act with due skill, care, and diligence. Specifically, Barclays did not adhere to its contact policies for customers in arrears, failed to engage in appropriate conversations to understand the reasons for arrears, and offered unaffordable or unsustainable forbearance solutions.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, emphasised that consumers should trust their lenders to help resolve financial difficulties. Barclays’ poor treatment risked exacerbating customers’ financial struggles. Firms must treat consumer credit customers fairly, particularly when they fall into arrears. The FCA’s action against Barclays highlights the importance of fairness and proper customer treatment, especially given the ongoing impact of the coronavirus pandemic on household incomes and budgets.
Despite identifying some of the issues as early as 2014, Barclays failed to rectify them due to inadequate systems and controls. Eventually, Barclays took adequate measures to address these problems and contacted all potentially affected customers. The FCA monitored this redress programme and took it into account when determining the fine. Barclays did not dispute the FCA’s findings and agreed to settle the case, qualifying for a 30% discount on the financial penalty, which would have otherwise been £37,223,500.
Key Takeaways:
- Fair Treatment: Ensure fair and appropriate treatment of customers, especially those in financial difficulties.
- Adequate Communication: Engage in proper conversations to understand customers’ circumstances and reasons for arrears.
- Forbearance Solutions: Offer affordable and sustainable forbearance solutions tailored to customers’ situations.
- Systems and Controls: Implement and maintain robust systems and controls to identify and address customer treatment issues promptly.
- Staff Training: Invest in training for staff in collections and recoveries to ensure effective management and fair customer outcomes.
In conclusion, Barclays’ significant failings in handling customers in financial difficulties led to a substantial FCA fine. This case underscores the critical importance of treating customers fairly, understanding their financial situations, and maintaining effective systems and controls to manage customer outcomes.
Back to the Dear CEO letter archives.