The Financial Conduct Authority has slapped Moneybarn, a subsidiary of longstanding Neil Woodford holding Provident Financial, with a £3m fine for treating vulnerable customers unfairly.
The regulator, which had been investigating the auto loan provider since December 2017, ruled it had not treated customers fairly when they fell behind with loan repayments while in financial hardship.
It also found that Moneybarn did not communicate “in a way which was clear, fair and not misleading” what would happen if customers failed to keep up with their payments.
More than 1,400 customers defaulted after entering into what the FCA called “unsustainable short-term repayment plans” when the breaches occurred between 1 April 2014 and 4 October 2017.
Mainstay Woodford holding
Moneybarn parent company Provident Financial had been a mainstay bet of troubled UK equities manager Woodford. The consumer credit firm appeared in the top 10 holdings of both Woodford Equity Income and Woodford Income Focus before they were suspended.
Link, which has been tasked with selling down the investments in Woodford Equity Income, still owns a 5% stake in the doorstep lender at the end of December.
Provident Financial’s biggest backer remains Woodford’s former employer Invesco, which owns 16% of the business. Its stake is comprised of legacy Woodford holdings in the Invesco Income and High Income funds that were inherited by Mark Barnett.
Schroders is the second largest investor behind Invesco with a 15% stake.
Moneybarn guilty of ‘serious breaches’
For its failings Moneybarn was slapped with a £2.8m fine. This was less than the £4m penalty it would have had to pay had it not agreed with the FCA’s findings thereby qualifying for a 30% discount.
The regulator said the final penalty amount also reflects the fact that Moneybarn voluntarily provided redress of over £30m to all the 5,933 customers who were potentially affected by its failings.
FCA executive director of enforcement and market oversight Mark Steward said Moneybarn had been guilty of “serious breaches”.
“Moneybarn did not give its customers, many of whom were vulnerable, the chance to clear their arrears over a realistic and sustainable period,” he said in a statement.
“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.”
