The Financial Conduct Authority (FCA) has today imposed a fine of £2.77 million on car finance provider, Moneybarn Ltd (Moneybarn), for not treating customers fairly when they fell behind with loan repayments while in financial difficulties, between 1 April 2014 and 4 October 2017.
Moneybarn also 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.
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.
Such customers are at an increased risk of financial vulnerability as they often have a poor or no credit history or past problems with credit due to periods of unemployment, ill-health or other adverse life events. They are also at greater risk of suffering detriment if they fall into arrears.
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.
Notes to editors:
- Final notice: Moneybarn Limited (PDF)[1]
- Between 1 April 2014 and 31 December 2017, the Moneybarn Group entered into 71,254 loans with customers.
- If customers are concerned they should contact Moneybarn on 0330 555 1230.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- On 1 April 2014, the FCA took over responsibility for regulating consumer credit firms.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[2].
For more information contact the FCA press office on 02070663232.