Bank ordered to repay millions in interest by FCA over timeshare loans mis-selling

  • 9 December 2020

ORX News story of the month: November 2020

Each month, we share a free operational risk loss event story from ORX News. The story is handpicked by the team as one of the most interesting stories reported by the service in the previous month. This story was published by the service in November 2020.

Bank ordered to repay millions in interest by FCA over timeshare loans mis-selling

On 4 November 2020, the Financial Times (FT) reported that Barclays had been ordered to repay millions in interest on timeshare loans that were mis-sold in Malta by its subsidiary Barclays Partner Finance (BPF).

Barclays acknowledged in a letter to its borrowers that it had been told by the UK’s Financial Conduct Authority (FCA) to hand back interest charged on loans issued between April 2014 and April 2016.

The FT reports that Azure Resorts, a banking partner of Barclays, was licensed by the FCA to sell loans. However, the employees that brokered the 1400 loans worked for another company, Azure Services, which between April 2014 and April 2016 was operating unlawfully without a broker’s license. BPF was reportedly unaware that Azure Services was acting unlawfully until 24 April 2016. Barclays then applied to the FCA to have these loans “made legal”. The 1444 affected customers appealed against the validation order claiming that they had been mis-sold the loans.

Barclays recognised that, during the relevant period, it did not provide the right level of service for some customers who bought time-share loans via Azure Services. Barclays said it would be contacting all affected customers to explain what this meant for them, and that it had put several new systems, processes, and training in place to prevent any reoccurrence. According to M1 Legal, a Malaga-based law firm representing the borrowers whose cases the FCA reviewed, the repaid and waved interest amounted to an estimated £26 million.

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Op risk losses categorised for easy analysis

Every single ORX News story is categorised to help you get the most from the data. The categories include the business line, event type, scenario category. All of this information makes it easier for you to use and analyse the loss events.

Extract of the data for this story from ORX News:

Business line: Retail Banking
Event type: Clients, Products & Business Practices
Loss amount: Not identifiable
Country: United Kingdom
Scenario category: Retail Mis-selling

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