Moneybarn fined £3m for treating borrowers badly
Car finance company Moneybarn has been fined £2.77m for not helping customers who fell into debt difficulties.
It has handed £30m to 6,000 customers hit by its actions, described by the City watchdog as "serious breaches".
"Moneybarn did not give its customers the chance to clear their arrears over a realistic and sustainable period," said the Financial Conduct Authority.
"All customers potentially affected by these findings have been fully compensated," the company said.
The fine relates to customers who fell behind with loan repayments while in financial difficulties, between 1 April 2014 and 4 October 2017.
Moneybarn targets people who face difficulty getting car loans from mainstream lenders because of their personal circumstances.
Such customers are at an increased risk of financial vulnerability as they often have a poor or no credit history or past problems with credit due to periods of unemployment, ill-health or other adverse life events, the FCA said.
They are also at greater risk of suffering detriment if they fall into arrears,
Moneybarn "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", said the FCA's executive director of enforcement and market oversight, Mark Steward.
He suggested the fine could have been higher if the lender had not voluntarily paid more than £30m to customers potentially affected by its failings, after discussions with the regulator.
"The FCA gave Moneybarn significant credit for this in assessing the size of the penalty imposed," Mr Steward said.
Who is Moneybarn?
The car credit company is owned by doorstep lender Provident Financial - a FTSE 250-listed firm - whose Vanquis lender was fined £2m and handed back £169m to customers in 2018.
Vanquis offered a credit card which was supposed to help customers manage their debt, but instead put borrowers further into debt, the FCA concluded two years ago.
Provident also owns consumer credit brand Satsuma and was the target of a failed takeover by rival Non-Standard Finance last year.
Moneybarn boss Shamus Hodgson said the firm had improved the way it works since 2017.
"The processes we have had in place since 2017 are clear, effective, and appropriate," he said.
"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."
Between 1 April 2014 and 31 December 2017, the period under scrutiny, the Moneybarn Group entered into 71,254 loans with customers.
If customers are concerned, they should contact Moneybarn on 0330 555 1230.