Here, we answer your questions about this latest grim episode for the banking sector.
What’s gone wrong?
Barclays says personal loan borrowers have been charged extra interest because of clerical errors. In a statement, 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.”
The issue is similar to one made by Northern Rock Asset Management, which announced last year that it would return interest paid by 152,000 borrowers as a result of paperwork inaccuracies.
When did the errors occur?
The mistakes that caused loan customers to be overcharged date back to October 2008. However, they only came to light when the bank announced its annual results in February, and reported that income from retail and business banking had "declined 4% to £1,086m primarily due to provisions taken to remedy historical interest charges incorrectly applied to customers".
Further details about the interest payment errors made by the bank were finally revealed this week, when Barclays put out a prospectus designed to help it raise £5.8bn in investment capital through the sale of new shares.
What should Barclays’ customers do?
Barclays has promised to rectify the situation so that “no customer will pay more than they were ever contractually expected to” – hence the repayment of interest. It has also pledged to check that other customers, such as Barclaycard holders, have not been similarly affected.
“Barclays is undertaking a review of all its businesses where similar issues could arise to assess any related issues,” the bank said.
It is contacting those affected within the next month, stressing that individuals do not have to take any action to receive their payouts. Barclays is working with the Office of Fair Trading to implement “a plan to return interest payments to customers as swiftly and efficiently as possible.”
The bank, which insists that no customers have been mis-sold loans as a result of this latest glitch, said: “Any affected customer will be contacted by Barclays.”
The inaccurate calculation of loan interest payments is just the latest in a string of problems for Barclays, which is currently being probed by the Financial Conduct Authority (FCA), the Serious Fraud Office and regulators in the US.
The prospectus published last Monday included details of the FCA inquiry, which could result in Barclays paying a £50 million fine due to agreeing £322 million of secret payments to Middle Eastern investors who bailed the bank out to the tune of £5 billion in 2008.
Barclays denies acting improperly in this instance, and claims that the fees relate to advisory services provided over a five-year period.
The bank has already been fined £290 million for attempting to manipulate Libor, the inter-bank lending rate, and has been forced to set aside £2.6 billion to compensate customers mis-sold payment protection insurance.
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