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One of Britain’s biggest banks has been told to compensate customers

Barclays told to compensate customers over mis-sold credit

A probe reportedly identified a lack of supervision over retailers offering credit.

One of Britain’s biggest banks has been told to compensate customers mis-sold “buy now, pay later” loans by retailers without proper oversight.

An internal investigation into Barclays Partner Finance (BPF), the consumer lending arm of Barclays Bank, reportedly identified a lack of supervision over retailers offering credit for purchases including cars, furniture and home improvements.

This potentially meant consumers were saddled with debt they could not afford to repay or that vulnerable people were subjected to pressure tactics by salesmen.

The Financial Conduct Authority (FCA) asked the banking giant to overhaul its lending practices when it learnt of the shortcomings, which were set out in a report from 2016.

A spokesman said it expected firms to offer “redress when appropriate” and it would “take appropriate action” if this did not happen.

Where any customer detriment is discovered, we will act swiftly to identify and fix the root cause, and learn how we can prevent it from happening again.

The investigators’ findings, reported by the Daily Telegraph, included an alleged failure to effectively scrutinise some credit agreements – which allow customers to pay for an item over a prolonged period – paving the way for loans to be sold in a misleading or highly pressured way.

Five firms selling BPF loans reportedly had more than one in 10 customers in arrears for their monthly repayments.

Another retailer had more than half of its customers falling behind on their debts, according to the report.

Cases flagged to investigators included one customer with learning difficulties who was pressured into taking out a loan and another who was sold “free credit” that actually carried 28.9% interest, it was reported.

A Barclays spokeswoman said: “Since commissioning this report in 2016, we have maintained an open and cooperative dialogue with the FCA, and have taken significant steps to review and improve our systems, processes and training to ensure that we meet our regulatory obligations and policy commitments.

“Where any customer detriment is discovered, we will act swiftly to identify and fix the root cause, and learn how we can prevent it from happening again.”

The investigation was said to have been launched after the FCA raised concerns with Barclays when the bank tried to expand its loan book.

An FCA spokesman said: “We use information from a number of sources to assess the potential for firms to cause consumer harm.

“Where consumer harm is identified, we expect firms to treat all impacted customers fairly, including offering redress where appropriate.

“We will take appropriate action where we judge that firms are not sufficiently fulfilling these obligations. “We were aware of the issues identified and raised concerns with Barclays at the time. We requested that they make changes to their processes and Barclays committed to fixing them.

“We continue to supervise the firm closely, which includes ongoing dialogue with Barclays about its lending practices. We are monitoring the situation and should any new information become available we will consider further regulatory measures.”

Article credit: Belfast Telegraph