Barclays fined £26m over poor treatment of customers in financial difficulty

Barclays has been fined £26 million after its poor treatment of some consumer credit customers who fell into arrears or experienced financial difficulties risked making their problems worse.

The Financial Conduct Authority (FCA) imposed the fine on Barclays Bank UK Plc, Barclays Bank Plc and Clydesdale Financial Services Limited (Barclays).

It said Barclays has pro-actively redressed these customers, paying over £273 million to at least 1,530,000 customer accounts since 2017 and the redress programme is close to completion.

Barclays apologised to customers and said it has now put several new measures in place, including changes to staff training.

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 regulator said.

The FCA found that Barclays failed to treat customers fairly or to act with due skill, care and diligence.

It said Barclays failed to follow its customer contact policies for those who fell into arrears, or have appropriate conversations with them to help understand the reasons for the arrears.

It also failed to properly understand customers’ circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions.

Consumer credit firms are required to take measures to properly understand customers’ financial difficulties and show forbearance and due consideration to customers in arrears or in financial trouble.

This includes understanding whether customers may be vulnerable in some way due to unemployment, a relationship breakdown, a bereavement, or illness.

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.

Many of the affected customers were vulnerable because of financial difficulties or other problems which Barclays failed to properly identify, the regulator said.

The FCA said Barclays identified some of the problems as early as 2014, but due to systems and controls failings these were not fully rectified.

Measures to resolve the problems were subsequently taken and Barclays has contacted all customers it thinks may be due for compensation.

The FCA took the redress programme into account when setting its fine.

Barclays did not dispute the FCA’s findings and agreed to settle the case.

As a result, it qualified for a 30% discount and the financial penalty would otherwise have been £37,223,500.

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’ 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 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.”

A Barclays spokeswoman said: “Barclays is a responsible lender and we strive to achieve good outcomes for our customers.

“Since the issue was first identified, we have implemented a number of changes to our customer journeys, systems, processes and colleague training to correct it, and the vast majority of customers who were impacted have already been contacted.

“We would like to apologise to those customers for not providing the level of service we should have.”