The Financial Conduct Authority (FCA) has fined credit card lender Vanquis £1,976,000 and told them to pay back hundreds of millions of pounds in interest charges.
The fine was given after the FCA concluded that customers didn’t have all relevant information needed to make an informed decision when purchasing an add-on product, called Repayment Option Plan (ROP), which was offered to their credit card customers as a way to manage their accounts.
In 100 per cent of calls reviewed by the FCA, sales agents did not explain the full cost of the product to customers nor did they explain to customers that the ROP could attract interest at the card rates varying from 19.9% to 79.9%.
In addition to the fine, the firm will also repay an estimated £168,781,000 in compensation to its customers, which equates to the amount of charges not disclosed to its customers when they bought ROP, dating back to 1 April 2014.
Vanquis agreed it had breached the Principles and agreed to pay back the interest customers were charged on the ROP from June 2003 to 31 March 2014, because before this time the FCA was not responsible for regulating the consumer credit market.
Mark Steward, Director of Enforcement and Market Oversight at the FCA, said:
“Vanquis failed to make sure customers were informed about the full cost of the ROP when it was offered to customers. Most Vanquis customers chose the ROP to help manage their credit without realising instead that the product might lead to their indebtedness increasing. Customers are entitled to be told all relevant information when being offered financial products. These were very serious breaches.
“Vanquis has decided now to do the right thing by acknowledging the wrong-doing and offering to compensate its customers. We are pleased the firm has extended the compensation to customers who purchased the ROP before we took responsibility for regulating the consumer credit market.”
ROP was a credit management tool that allowed customers to freeze their credit card account, take a payment holiday for one month per year, utilise a lifeline that would avoid late fees for one month per year, and receive SMS alerts relevant to their account.
Customers who had this product do not need to do anything. They will be contacted by the firm directly in due course.