The financial watchdog has fined car finance provider Moneybarn £2.77m for not treating customers fairly when they fell behind on loan repayments.
Moneybarn, a subsidiary of Bradford-based Provident Financial, has voluntarily repaid over £30m to 5,933 customers potentially aeffected by the failings, the Financial Conduct Authority (FCA) said.
The FCA also found that Moneybarn did not communicate the likely financial consequences of failing to keep up with payments to customers in a way which was clear, fair and not misleading.
More than 1,400 customers – many of whom were vulnerable – subsequently defaulted after entering into unsustainable short-term repayment plans.
The period in question was between April 1, 2014 and October 4, 2017.
Moneybarn has voluntarily provided redress of more than £30 million to all 5,933 customers potentially affected by these failings without requiring them to demonstrate that they have suffered any financial detriment.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: “Moneybarn did not give its customers, many of whom were vulnerable, the chance to clear their arrears over a realistic and sustainable period.
‘It also did not communicate clearly to customers, in financial difficulty, their options for exiting their loans and the associated financial implications, resulting in many incurring higher termination costs. These were serious breaches.
“After discussions with the FCA, Moneybarn voluntarily paid more than £30 million in redress to customers potentially affected by its failings. The FCA gave Moneybarn significant credit for this in assessing the size of the penalty imposed.’
Moneybarn is a subsidiary of Provident Financial plc, a FTSE 250 company. It provides motor finance for used vehicles predominantly to customers who typically cannot access finance from mainstream lenders due to their personal circumstances.
Shamus Hodgson, Managing Director of Moneybarn said: “Throughout the investigation we worked collaboratively with the FCA. We are happy that all customers potentially affected by these findings have been fully compensated for any detriment they might have suffered. The processes we have had in place since 2017 are clear, effective, and appropriate. The FCA has clarified its expectations of lenders in these important aspects of customer treatment, which will provide guidance for all finance companies within the motor industry. As market leaders in this area, we’re proud to set an example for others in the industry to follow.”