Car finance firm Moneybarn has been fined almost £3 million after failing to help vulnerable customers.
The company has also paid £30 million in compensation to customers after a City regulator said it found serious breaches over how it treated customers who fell into arrears.
The Financial Conduct Authority (FCA) slapped the sub-prime car lender with the £2.8 million fine after it said customers were not given a “realistic” time-frame to clear their arrears.
More than 1,400 customers ended up defaulting on their loans after signing up to short-term repayment plans with the firm, which is owned by FTSE 250 lender Provident Financial.
The FCA said the payment plans were “unsustainable” and that many of the customers impacted by this were “vulnerable”.
It added that Moneybarn has now voluntarily paid compensation to all 5,933 customers who were potentially affected by the firm’s failings.
The FCA said it unfairly treated these customers, who often have a poor or no credit history, between April 1 2014 and October 4 2017.
Mark Steward, executive director of enforcement and market oversight at the FCA, 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.”
The FCA said Moneybarn did not dispute its findings and agreed to redress customers, meanings its potential fine was reduced by 30%.