Moneybarn fined £2.7m for unfair treatment of customers

Moneybarn has been fined £2.77m by the Financial Conduct Authority (FCA) for unfair treatment of customers in arrears.

The motor finance firm has also agreed, following talks with the FCA, to voluntarily return £30m to customers potentially affected by its failings.

Moneybarn has 62,000 customers and in 2018 it made adjusted profits before tax of £28.1m. Its owner Provident Financial has been working with the FCA since 2017 to progress the investigation.

The FCA said Moneybarn did not treat customers fairly when they fell behind with loan repayments while in financial difficulties, between 1 April 2014 and 4 October 2017.

It added that Moneybarn 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.

According to the FCA more than 1,400 customers subsequently defaulted after entering into “unsustainable” short-term repayment plans.

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 £30m 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, 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.

In a statement Provident Financial said: “The Financial Conduct Authority (FCA) have today issued their final notice in respect of the investigation into Moneybarn’s historic lending practices.

“The Final Notice relates to aspects of Moneybarn’s previous forbearance and termination practices between April 2014 and October 2017. Moneybarn worked collaboratively with the FCA during the investigation, accepted its findings, and put in place clear, effective and appropriate processes to address the FCA’s concerns by October 2017. Moneybarn completed a redress programme to compensate all potentially affected customers in the third quarter of 2019, and the total cost of the investigation was within the £20 million provision originally established in 2017.”