Moneybarn pays more than £30m to customers after failing to treat them fairly when they fell behind on loans
Moneybarn has paid more than £30m to customers after failing to treat them fairly when they fell behind on loan repayments.
The car finance firm, owned by Provident Financial, voluntarily handed the money to all 5,933 customers potentially affected by the breaches, which occurred between April 1, 2014 and October 4, 2017. It was also fined £2.77m by the Financial Conduct Authority for the way it behaved.
The FCA said Moneybarn’s actions meant more than 1,400 customers, many of whom were vulnerable, defaulted on their loans after entering into ‘unsustainable short-term repayment plans’. This meant that they were punished with extra fees and charges, which many could not afford.
Handover: The car finance firm voluntarily handed the money to all 5,933 customers potentially affected by the breaches
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.’
The FCA said it would have imposed a fine of at least £3.96m if Moneybarn had tried to dispute its findings, and had it not voluntarily paid the £30m redress to customers.
Moneybarn lends to those who want to buy a used car but typically have a poor credit history, may have suffered with problems such as unemployment or ill health, and cannot get loans from mainstream banks.
Moneybarn said it had put in new processes into place since 2017, and that it fully compensated customers.
Shamus Hodgson, managing director of Moneybarn, said: ‘We are happy that all customers potentially affected by these findings have been fully compensated for any detriment they might have suffered.’