Barclays fined £ 26million for failing 1.5million prospects in monetary bother – and the debtors have been reimbursed
What went wrong at Barclays?
The Financial Conduct Authority (FCA) noted that between April 2014 and December 2018, some retail and small business customers who were offered loans or credit cards by Barclays were not treated properly when they defaulted. It emerged that Barclays had failed to treat customers fairly, or acted with "appropriate skill, care or vigilance".
In practice this meant that Barclays:
- Failure to follow own guidelines for contacting customers who was in default.
- No adequate discussions with these customers that would have helped him understand why the customer was behind schedule.
- Help offered to customers behind schedule that was unaffordable or unsustainable, because it didn't understand their circumstances properly.
According to the FCA, Barclays had identified some of these issues back in 2014, but further bugs in its systems and controls meant that the issues were not fully resolved for several years.
While Barclays does not have a standard definition for deciding who is considered "arrears", it does follow FCA guidelines on the matter – and this typically defines arrears as a shortfall in one or more payments that a customer has agreed to make.
All companies offering consumer credit products should take reasonable steps to understand their customers' circumstances and show forbearance when customers experience financial problems – and this is even more important now as the coronavirus pandemic continues to affect people's finances. Without proper assistance, customers who are in arrears could make priority payments on a loan or credit card when they should focus on paying a "priority debt" such as a mortgage, council tax, child support, or utility bills.