Barclays Bank is expected to repay a substantial amount of money as interest timeshare loans for failing to adhere to regulatory requirements. Borrowers and consumer watch groups have applauded the decision and believe this is a warning for other financial institutions that may be violating established guidelines on offering loans.
Further investigations are also underway and may mean more payments for the holders. David Azzato recently explained how this happened, what the borrowers should expect, and how this relates to lending processes by various financial institutions. The case involves several parties and organizations, making it hard for the relevant authorities to untangle.
For instance, the Financial Conduct Authority finds it hard to determine what each of the parties knew and how they shared such information among the players. Barclays Bank partnered with Azure Services, a subsidiary of Azure Resorts, for two years. The former organization didn’t have the same privileges as the latter.
According to the findings, the Financial Conduct Authority had licensed Azure Resorts to broker loans. However, the employees who designed the offers weren’t working for Azure Resorts. Instead, they were working for Azure Services. Although Azure Services received approval from the regulatory body, it only did so in early 2016.
Investigators noted that Azure Services had not received FCA approval during the two-year partnership with the bank and raised questions over the deal. A Malaga-based law firm known as M1 Legal represented the borrowers during the legal proceedings. The organization worked closely with FCA to understand the financial agreement and questioned Azure Services’ efforts to encourage individuals to apply for the loans.
The law firm estimates the total amount to be waived and repaid about £26 million. However, a representative from Barclays Bank has disputed the figure and believes this has been highly inflated. It’s worth noting that the lender hasn’t provided another estimate of the penalties nor disclosed how it intends to review its working relationship with Azure Services.
However, it has put several measures to ensure the clients have more leverage. The regulatory body informed all borrowers about the issue through letters to everyone who had received the loans during the period. It revealed that Barclays would give back the interest that customers had already paid on the loans.
David Azzato notes that besides the interest, the bank is also canceling the future interest that would have been charged. If the figures revealed by M1 Legal are actual, the financial institution would be giving back about 50% of the loans offered during the period, which is a substantial percentage; however, you look at it.
Barclays has been a leading U.K. lender and helps clients manage their finances and strengthen their assets. According to David Azzato, other banks have many lessons to learn from the FCA’s investigations.
The lender is also required to hire an independent assessor to review the loans and evaluate their affordability. One of the most critical steps lenders should take is verifying whether borrowers can repay loans. Despite the simplicity of this step, many financial institutions ignore it.
More information at https://www.crunchbase.com/person/david-azzato