Barclays miscalculated personal loan interest rates over five years. Barclaycard customers could also be affected.
Around 300,000 Barclays customers are to receive compensation after the bank miscalculated the interest owed on personal loans. The total cost is estimated to be at least £100m after mistakes were made on paperwork since October 2008. The compensation paid could be an average of £330 per borrower.
The total bill for the bank, and the number of people affected, could be higher. Other divisions – Barclaycard, Barclays Wealth and Barclays Corporate – are now undertaking a review to see if customers were short-changed by the errors.
A spokesman described the latest problem, which relates to arrears notices and statements, as “technical documentary errors”. The errors on statements and arrears notices were mentioned in annual results in February, when it reported that income had declined “due to provisions taken to remedy historical interest charges incorrectly applied to customers”.
The company has now said it will write to customers while more detail was published in a wider 185-page document yesterday. Barclays said it had “identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts. It is therefore implementing a plan to return interest incorrectly charged to customers”.
A spokesman for the bank said: “Barclays has proactively reviewed information it has historically sent to its customers relating to interest charges, where we have found technical documentary errors. As a result Barclays has identified certain issues with the information contained in some statements and arrears notices relating to consumer loan accounts.
“Due to these notification errors, interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned. No customer will pay more than they were ever contractually expected to.
“Barclays has notified the Office of Fair Trading (OFT), which is responsible for consumer credit issues, and is implementing a plan to return interest payments to customers as swiftly and efficiently as possible. Barclays is undertaking a review of all its businesses where similar issues could arise to assess any related issues.
“Any affected customer will be contacted by Barclays and customers do not need to take any action.” Letters will be sent out next month to affected customers.
The error was revealed in a prospectus for Barclays’ £6bn 1-for-4 rights issue, which was launched yesterday to plug a regulatory capital shortfall.
It also admitted that it was facing a £50m regulatory fine for failing to disclose payments made to Qatar which it dressed up as fees for “advisory services”. Barclays paid Qatar £322m in hidden fees to secure the gas-rich Gulf state’s support for its rescue fundraising at the height of the financial crisis and keep the bank out of UK taxpayers’ hands.
Barclays also faced stinging criticism in a new ethical scorecard of banks, published yesterday. Barclays’ 12 million current account customers have been urged to switch to other banks and building societies after the bank scored just four out of 100 points in a test for honesty and customer service.
Campaign group Move Your Money said Barclays was the lowest scoring financial institution out of 70 assessed. The findings were published amid the launch of the industry’s new Current Account Switching Service, which promises to transfer accounts hassle-free within seven working days.
Anthony Jenkins, who last year replaced controversial chief executive Bob Diamond, has gone to great lengths to underline a new era for Barclays, promising to make it a “valuable and sustainable institution”.