Moneybarn will pay nearly £33m in fines and customer compensation after the City regulator found serious breaches in the way the subprime car lender treated vulnerable customers.
The Financial Conduct Authority, which fined Moneybarn £2.77m, said the company had not treated customers fairly when they fell behind on repayments.
The FCA said the lender, which is owned by the FTSE 250 doorstep lender Provident Financial, also failed to explain the consequences of missing payments in a way that was “clear, fair and not misleading” to borrowers.
More than 1,400 customers defaulted on their loans after signing up to Moneybarn’s “unsustainable” short-term repayment plans, the FCA said. The breaches took place between April 2014 and October 2017.
Moneybarn has voluntarily paid more than £30m in compensation to 5,933 customers, without asking them to prove they suffered as a result. They received an average of £5,056.
It ends a two-year investigation into Provident’s motor finance firm, which provides car loans to people with poor credit history. Provident also owns Vanquis bank, Provident home credit and the payday lender Satsuma.
Mark Steward, the 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.”
The FCA originally planned to fine Moneybarn nearly £4m but reduced the penalty after the firm accepted the regulator’s findings.
Provident was one of the poor stock picks by Neil Woodford, a longstanding backer of the doorstep lender before his fund was suspended and subsequently entered liquidation.
Moneybarn said it had already covered the costs of the fine and the compensation, having made a provision of £20m for the investigation in 2017 and written off additional costs.
The managing director, Shamus Hodgson, said: “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.”
Source: Read Full Article