17th Feb 2020 11:30
(Alliance News) - Provident Financial PLC said Monday the UK regulators have finished their probe into its subsidiary Moneybarn, fining the unit GBP2.8 million.
As part of the investigation, the Financial Conduct Authority fined Moneybarn - Provident's sub-prime auto loans business - GBP2.8 million for not treating customers "fairly" when they fell behind loan repayments.
Moneybarn completed a redress programme to compensate all affected customers in the third quarter of 2019, returning more than GBP30 million to 5,933 customers.
"Moneybarn also 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," the FCA said.
As a result of Moneybarn's actions, the FCA said 1,400 customers defaulted after entering into unsustainable short-term repayment plans.
FCA Executive Director of Enforcement & Market Oversight Mark Steward 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."
Provident Financial received a 30% discount as it did not dispute the findings.
The Financial Conduct Authority was investigating Moneybarn's lending practices from April 2014 to October 2017, where it entered into 71,254 loans.
"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," Provident said.
Shares in Provident Financial were 2.1% lower in London on Monday at 459.17 pence each.
By Paul McGowan; [email protected]
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