In recent months Barclays bank has become one of the key players in the Payment protection Insurance story. It is estimated that the lender has sold between 1.6 million and 2.4 million policies, but it is unknown how many of these may have been mis-sold. What is known is that that the lender has already paid out more than £200 million in compensation and that The Financial Ombudsman examined approximately 8,000 customer complaints regarding the mis-selling of Barclays' payment protection policies in 2009 and 2010. The Financial Ombudsman Service found in favour of the customer in 75% of these cases. Although this is slightly below the average, approximately 90% of all PPI cases reviewed by The Financial Ombudsman Service find in favour of the customer, it still shows a significant pattern of mis-selling.
As one of the country's largest lenders Barclays seems keen to resolve and move on from the Payment Protection scandal. In April 2011 it was one of the four major lenders to announce it would set aside funds to compensate victims of mis-selling. The decision came after a High Court Review of new Financial Service Authority guidelines dismissed The British Banking Associations objection to the new rules. The new rules were particularly significant as they will force banks to examine older sales and potentially revisit claims they have previously rejected. The new rules are good news for consumers, though, as they will more closely regulate future sales and, hopefully, prevent future mis-sales. After the ruling, the decision was taken not by The British Banking Association not to appeal and, for many, this was seen as the final nail in the coffin of the industry's resistance to accept blame for the PPI problem.
The Payment Protection Insurance scandal first came to light in 2006 following investigations by The Financial Services Authority and The Office of Fair Trading. Their investigations found significant failings in the way PPI was being sold across the financial world from loan insurance to PPI sold on credit cards. For many years PPI had been a significant source of revenue for lenders and this had led to an unhealthy sales culture of high commissions and a 'sell at all cost' attitude. As a result, many people who did not want or need policies being persuaded to take out the cover.
Following the investigations, several of the worst mis-selling offenders were given significant fines although, it should be noted, Barclays was not one of these lenders.
Not everyone who was mis-sold a policy was forced or cajoled into taking out payment protection insurance. Many people were inadvertently sold the cover by staff who didn't really understand the cover or who had not been given sufficient training to evaluate the suitability of a customer for the cover.
Whilst the High Court Review was pending many banks, including Barclays, placed claims on hold. For most lenders this has led to a significant backlog of cases. In June 2011, Barclays became the first British bank to announce it would be settling all PPI claims registered before April 20th on a 'no quibble' basis. This means, quite simply, that it will offer full refunds, plus 8% interest, to anyone who registered a claim before that date. A spokesperson for the lender said the move was a 'gesture of goodwill' as they believed customers whose complaints had been held up by the judicial review had waited long enough. The decision should allow Barclays to move through its extensive backlog. All new cases; however, will be evaluated on their merits and there be no blanket refund of all payment protection policies. A spokesman for Which?, who have long campaigned against the mis-selling of PPI, said of the decision:
"It's fantastic to see Barclays stepping up in this way, acknowledging their mistakes and refunding customers what they're owed, no questions asked,"
If you believe you have been mis-sold a payment protection insurance policy by Barclays, or any other lender, you have the right to make a claim. On average our customers reclaim £2,500 and we settle many claims in just eight weeks. Making a claim will not damage your relationship with your bank or affect your credit rating and you can even make a claim if your loan or credit card is already paid off.
If you would like more information regarding PPI claims, call our customer care team on 0207 471 2000.