Barclays loan customers could be in line for windfall after paperwork errors

Bank could face costs of £100m to repay interest to customers whose statements did not comply with Consumer Credit Act

As many as 300,000 Barclays personal loan customers could be in line for a windfall after the bank uncovered "errors" in its paperwork.

Barclays said it was "implementing a plan to return interest payments to customers as swiftly and efficiently as possible" after reviewing the documentation sent to customers in past years.

The bank did not disclose the size of the bill but could face costs of £100m to repay interest to customers who should not have been charged during the period because their statements did not comply with the Consumer Credit Act.

The error appears to be similar to one that led to the taxpayer having to pick up a £270m bill for windfalls to 152,000 people who have, or had, a personal loan with Northern Rock. That blunder was disclosed in December 2012.

The Barclays disclosure was contained in the prospectus accompanying the bank's £6bn cash call. The bank said that a provision of an undisclosed size had been made for these costs and also revealed that it was now reviewing all its businesses – Barclaycard, Barclays Wealth and Barclays Corporate – to assess them for similar problems.

A Barclays spokesman 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."

He added that as a result of these errors, interest was not due on some accounts during the period that the bank made this mistake.

"While 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," said the spokesman.

"Barclays has notified the Office of Fair Trading, 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 would be contacted by the bank and customers do not need to take any action, said the spokesman.

The Northern Rock error involved some customers with certain types of loan not being given all the information in their statements they were entitled to by law. As a result, interest payments on these loans were not legally enforceable.

The statements had failed to include the original amount borrowed. The Consumer Credit Act requires such statements to contain the sum borrowed, plus the opening and closing balance. Borrowers are not liable for interest relating to a period when a lender has not provided the information.

In the case of Northern Rock, most people had their loan account balance "corrected" to reverse the consequences of them being charged interest during the period when the paperwork did not meet the legal requirements. However, if the loan had already been paid off, they received a cash refund.

Article Source : http://www.guardian.co.uk

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