Barclays has been hit with a £26m fine for its treatment of borrowers who fell into arrears or experienced financial difficulties over a four-year period.
The UK regulator said that between April 2014 and December 2018 the lender failed to follow the right procedures for contacting customers who had fallen behind on loan repayments, and did not have “appropriate conversations” with them.
This conduct caused it to offer them “unaffordable, or unsustainable, forbearance solutions”.
Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority, 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.”
Under the FCA’s rules, banks and credit card issuers are required to take steps to ensure they properly understand any customer’s financial difficulties. They are also expected to show forbearance and “due consideration” to customers who have fallen into arrears or are struggling to make credit repayments.
These rules are designed to prevent any customer under financial pressure from making payments under a consumer credit arrangement at the expense of a “priority debt” — such as a mortgage, council tax, child support payment or utility bill.
However, some Barclays customers who fell behind on loan or card payments or went over their agreed borrowing limits were not always contacted or treated in the right way. In some cases, they were not offered suitable options in their circumstances, such as a reduction of interest, or cancellation of charges.
According to the regulator, Barclays identified some of the problems with its customer procedures as early as 2014, but because of failings in its internal systems and controls, these were not fully rectified.
Subsequently, the lender contacted all customers to apologise for their treatment and confirm it would refund them the relevant interest, fees and charges that were applied during the period. The FCA monitored this programme.
Barclays has since proactively paid out more than £273m in redress to at least 1.5m customer accounts.
A Barclays spokesperson 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.”
In a separate enforcement action on Tuesday, the FCA said it had also fined the former chief investment officer of hedge fund Fenician Capital Management £100,000 for market abuse.
Corrado Abbattista was handed the penalty and prohibited from carrying out regulated activities for “creating a false and misleading impression as to the supply and demand for equities” in 2017.
In its announcement, the regulator said that “on multiple occasions, Mr Abbattista placed large misleading orders for contracts for difference referenced to equities, which he did not intend to execute” — a practice more commonly known as “spoofing”.
Mr Abbattista’s legal representatives did not immediately respond to requests for comment.
The FCA had first proposed the fine in September. Mr Abbattista then referred the matter to its upper tribunal, but the referral was withdrawn on November 10.
Nick Bayley, head of UK regulatory consulting at advisory firm Duff & Phelps, suggested further similar enforcement actions could follow.
“This is the FCA’s very first market abuse outcome under the EU Market Abuse Regulation, which went live in July 2016,” he noted. “We can see from its annual report that the regulator had 29 market manipulation cases open as at 31 March this year, so hopefully other outcomes will follow quickly in its wake.”
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