Banks will pay out £47mln to support borrowers who are struggling financially, the Financial Conduct Authority (FCA) announced on Thursday.
17 lenders have agreed to pay out the cash after the FCA found issues with how 100 banks tailored support to different customers.
Many were also failing to respond to vulnerable customers and were not offering enough money guidance and debt advice, the FCA explained, with 195,000 customers now set to receive the redress payments.
“Where we see firms not providing the right support, we will act quickly to put this right,” consumer executive director Sheldon Mills said.
“Firms are already paying […] compensation for not providing appropriate support to borrowers.”
Proposals were also made to permanently introduce protections for mortgage, credit and overdraft holders that were introduced in 2020 as the pandemic sent the UK into lockdown.
Under these, banks have had to offer increased support to customers struggling to make repayments, including by changing loan terms.
“Many firms have been following our temporary guidance, developed during the pandemic, to support borrowers in tough times. Our proposals today will help ensure this continues,” Mills added.