Connect with us

Hi, what are you looking for?

Investing

Barclays fined £26m for poor treatment of struggling borrowers

Barclays has been hit with a £26m fine for poor treatment of more than 1.5 million struggling borrowers, prompting the City regulator to warn lenders over mistreating customers facing financial hardship during the Covid crisis.

Barclays was found to have mistreated business and personal customers who were in financial difficulties and fell behind on credit card and loan payments between 2014 and 2018. The Financial Conduct Authority (FCA) said the bank failed to properly contact customers who fell into arrears and did not have appropriate conversations about their individual circumstances.

It meant the bank ended up offering struggling borrowers unaffordable or unsustainable payment plans that could put them under pressure to prioritise their Barclays debt over other key financial responsibilities such as their mortgage, council tax, child support or utility bills.

The regulator said Barclays ultimately “failed to treat customers fairly or to act with due skill, care and diligence”.

The FCA director of enforcement and market oversight, Mark Steward, said customers should be able to trust that their lender will help resolve any financial difficulties, rather than make them worse.

“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 said.

There are growing concerns about whether households and businesses will be able to keep up with growing debts as a result of the Covid crisis, as well as how banks will handle collection and recoveries when customers default.

Last month, research by the debt charity StepChange showed that borrowing and arrears linked to the pandemic has surged 66% since May to £10.3bn. The number of people who are in severe debt also jumped to 1.2 million – nearly doubling since March. A further 3 million people are at risk of falling into arrears after taking on extra short-term loans.

Lenders are working with the Treasury to craft a standard set of rules for how to handle collection and recoveries of government-backed bounce back loans for small businesses, but those standards are unlikely to be extended to other forms of debt taken on during the Covid crisis.

The FCA said on Tuesday that Barclays identified some of its own problems as early as 2014 but did not fully address the problem until years later. Barclays has now launched, and nearly completed, its own compensation programme for those failings, having paid more than £273m to at least 1,530,000 customer accounts since 2017. All affected borrowers should have already been contacted by the bank.

The FCA slashed the total fine by nearly a third in light of the compensation programme. The watchdog would have otherwise forced Barclays to pay £37.2m for the breach.

Barclays issued an apology for its failings. It said in a statement: “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.”

Read more:
Barclays fined £26m for poor treatment of struggling borrowers

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

THE PESO strengthened against the dollar on Tuesday amid easing global oil prices and ahead of an expected increase in remittances due to the...

Economy

PHILIPPINE STOCKS extended their climb on Tuesday on last-minute bargain-hunting and ahead of the rebalancing of the MSCI. The bellwether Philippine Stock Exchange index...

Economy

THE government financial institutions (GFIs) that will be tapped to provide capital and help manage a P250-billion sovereign wealth fund have disclosed their proposed...

Economy

THE European Chamber of Commerce of the Philippines (ECCP) urged the Philippines to eliminate tariffs on imports of all electric vehicles (EVs) regardless of...

Economy

PRESIDENT Ferdinand R. Marcos, Jr. is expected to sign an executive order (EO) that will fast-track applications for investments deemed strategic to the economy,...

Economy

AN Israeli tech investor said a country’s legal system is a major consideration in attracting foreign investment, and urged legislators to reform the tax...

You May Also Like

Investing

The minute that any question pops into your head, you can simply ask Google. No longer do we have to pour over books and...

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Investing

Browsing history makes referring to sites and pages you’ve visited in the past seamless. It’ll help you recall what page you checked out on...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.