The Financial Conduct Authority (FCA) has concluded its investigation into motor finance provider Moneybarn, fining the firm £2.77m for the unfair treatment of customers.
The regulator found that customers in financial difficulty who had fallen behind with loan repayments were not treated fairly by Moneybarn between 1 April 2014 and 4 October 2017.
The company also failed to communicate the likely financial consequences of falling behind with loan repayments to customers in a manner that was clear, fair and not misleading. More than 1,400 customers – many of whom were vulnerable, according to the FCA – subsequently defaulted after entering into unsustainable short-term repayment plans.
Moneybarn has provided redress of more than £30m to all 5,933 customers who may have had been affected by these failings, without requiring them to demonstrate they had suffered any financial detriment.
“Moneybarn did not give its customers, many of whom were vulnerable, the chance to clear the arrears over a realistic and sustainable period,” explained Mark Steward, executive director of enforcement and market oversight at the FCA.
“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.
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“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 did not dispute the FCA’s findings. The firm’s agreement to accept the FCA’s findings meant it qualified for a 30% discount in addition to the credit it received for the redress paid to customers. Otherwise, the FCA would have imposed a financial penalty of at least £3,963,500.
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 are proud to set an example for others in the industry to follow.”