The UK’s Financial Conduct Authority (FCA) said on Tuesday that it has fined Barclays US$34.65 million for failures in how the bank treated customers who fell into arrears.
Banks will take note of the penalty as they brace themselves for a rise in bad loans, with customers struggling to make ends meet in the worst downturn in 300 years because of the pandemic.
The FCA said Barclays has redressed the difficulties proactively, paying over £273 million into at least 1.5 million customer accounts since 2017 in a programme that is close to completion.
Barclays failed to follow its own policies for dealing with customers in arrears in not talking with them to understand why they were unable to make repayments, the watchdog said.
The bank countered that it implemented changes once the problem was identified and the vast majority of customers who were affected have already been contacted.
“We would like to apologise to those customers for not providing the level of service we should have,” Barclays said in a statement.
The FCA said it requires consumer credit firms to show forbearance and due consideration to customers in arrears or in financial difficulties.
“Otherwise, a customer under financial pressures could end up making payments on a consumer credit loan at the expense of a priority debt, such as a mortgage, council tax, child support and utility bills,” the FCA said in a statement.
“The FCA recognises the challenges firms face in this area due to the coronavirus, which only heightens the importance of firms treating customers in financial difficulty fairly and appropriately,” the watchdog said.
The FCA said that Barclays did not dispute its findings and agreed to settle the case, leading to a 30% discount on the fine, which otherwise would have been £37.2 million.