Barclays Fined £26M For ‘Poor’ Treatment Of Customers In Financial Hardship

Barclays has been fined £26 million by the UK’s Financial Conduct Authority (FCA) for failures in how the bank treated their consumer credit customers who fell into arrears.

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Specifically, the FCA found that retail and small business customers in financial distress, who had been offered consumer credit by Barclays (BARC) Bank UK PLC, Barclays Bank PLC and Clydesdale Financial Services between April 2014 and December 2018, were treated “poorly” when they fell into arrears. The UK regulator added that Barclays failed to treat customers “fairly or to act with due skill, care and diligence.”

In response, the FCA said that Barclays has pro-actively redressed these customers, by paying over £273 million to at least 1.53 million customer accounts since 2017. The redress programme is close to completion, the regulator added.

“Consumers should feel reassured that their lender will work with them to help resolve any financial difficulties, whereas Barclays’s poor treatment of its customers risked making these difficulties worse,” the FCA’s Mark Steward stated. “Firms must treat consumer credit customers fairly, including when they find themselves in arrears. We will take action against unfair treatment, or where firm systems expose customers to the risk of unfairness. While this case predates the pandemic, this message is especially important as the impact of coronavirus continues to affect household incomes and budgets.”

According to the findings, Barclays failed both to follow contact policies for customers who fell into arrears, as well as to properly understand customers’ circumstances leading the bank to offer unaffordable, or unsustainable, forbearance solutions.

“We would like to apologise to those customers for not providing the level of service we should have,” Barclays commented in a statement.

The FCA said that Barclays did not dispute the watchdog’s findings and agreed to settle the case. As a result, the bank qualified for a 30% discount on the financial penalty, which otherwise would have been £37.2 million. (See BARC stock analysis on TipRanks)

Earlier this month, Citigroup analyst Andrew Coombs lifted the bank’s price target to 140p from 125p while maintaining a Hold rating.

Overall, the stock scores a Moderate Buy analyst consensus based on 7 recent Buy ratings versus 7 Hold ratings. That’s with an average price target of 148.27p, which implies 4.8% upside potential over the coming 12 months.