The FCA has handed a £2.77m fine to car finance provider, Moneybarn, for not treating its customers fairly when they fell behind with loan repayments while in financial difficulties.

The period in question stretched between 1 April 2014 and 4 October 2017, and the FCA added that Moneybarn did not communicate the likely financial consequences of failing to keep up with payments to customers in a way that was ‘clear, fair and not misleading.’

More than 1,400 customers subsequently defaulted after entering unsustainable short-term repayment plans, according to the regulator.

The FCA revealed Moneybarn has already voluntarily provided redress of more than £30m to all 5,933 customers potentially affected by the failings without requiring them to demonstrate they had suffered any financial detriment.

FCA executive director of enforcement and market oversight, Mark Steward, commented: “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.

“After discussions with the FCA, Moneybarn voluntarily paid more than £30m in redress to customers potentially affected by its failings. The FCA gave Moneybarn significant credit for this in assessing the size of the penalty imposed.”

The FCA added that Moneybarn’s agreement to accept the outcome meant it qualified for a 30% discount in addition to the credit it received for the redress paid to customers. Otherwise, the FCA would have imposed a financial penalty of at least £3,963,500.

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