The Financial Conduct Authority (FCA) has today imposed a fine of £1,976,000 on credit card lender, Vanquis, for failing to disclose the full price of an add-on product, called Repayment Option Plan (ROP). The firm will also repay an estimated £168,781,000 in compensation which constitutes the amount of the charges not disclosed to customers when they bought the ROP.
When selling the ROP, Vanquis told customers how the product worked and what the monthly charge was but did not inform customers that the full cost of the product included an interest component where there was an end of month unpaid balance on their credit card.
The FCA has ordered Vanquis to pay back the interest customers were charged on the ROP from 1 April 2014 to when customers were informed of the full cost of the ROP. Vanquis has voluntarily 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.
Since June 2003 the ROP was offered to all Vanquis credit card customers as a way of helping them to manage their account. The ROP was a credit management tool that permitted 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.
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.”