The fine followed a finding by the Financial Conduct Authority (FCA) that Moneybarn did not treat customers fairly when they fell behind with loan repayments due to financial difficulties between April 2014 and October 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.
“After discussions with the FCA, Moneybarn voluntarily paid more than £30m in redress to customers potentially affected by its failings. The FCA gave Moneybarn significant credit for this in assessing the size of the penalty imposed.”
Shamus Hodgson, managing director of Moneybarn, said: “Throughout the investigation we worked collaboratively with the FCA.
“We are happy that all customers potentially affected by these findings have been fully compensated for any detriment they might have suffered. The processes we have had in place since 2017 are clear, effective, and appropriate.
“The FCA has clarified its expectations of lenders in these important aspects of customer treatment, which will provide guidance for all finance companies within the motor industry. As market leaders in this area, we’re proud to set an example for others in the industry to follow.”
More than 1,400 customers defaulted after entering into what the FCA termed “unsustainable” short-term repayment plans.
Bradford-based Provident said that Moneybarn had finished a redress programme to compensate all potentially affected customers in the third quarter of 2019.
Moneybarn did not dispute the FCA’s findings and the regulator said the fine would have been at least £4m if the company had not compensated customers.
The fine marks the end of an investigation that began in 2017 for Provident, which provides credit to people who do not meet the lending criteria of mainstream banks.
The sub-prime lender successfully rebuffed a takeover attempt by smaller rival Non-Standard Finance last year and has since set out to return its consumer credit division to profit.