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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Barclays fights US electricity price manipulation fine through the courts

Bank intends to 'vigorously defend' $470m fine for allegedly manipulating electricity prices

Barclays has pledged to fight a $470m (£300m) penalty for allegedly manipulating electricity prices in California by taking the case through the US judicial system.

Faced with an order by the federal energy regulatory commission (Ferc) to pay a $435m fine and hand $35m of profits to low-income households, Barclays insisted that its trading activities had been legitimate and did not break any laws.

"We intend to vigorously defend this matter in federal court, where the Ferc will have the burden of proving its allegations and we will be able to present a balanced and full presentation of the facts," Barclays said.

The penalty from Ferc is based on allegations about Barclays' trading of electricity for two years to December 2008. It was first mooted in October and late on Monday was upheld by the Washington-based regulatorwhich gave the bank 30 days to pay the fine or appear in court. The proposed penalty is being levied at a time when the bank's new management team, led by chief executive Antony Jenkins, is attempting to rebuild its reputation following the £290m fine for rigging Libor which led Jenkins' predecessor Bob Diamond to quit the troubled bank.

The penalty from Ferc is larger than the Libor rigging fine and led to some concern among bank analysts that it could have an impact on the complex legal agreements struck by Barclays with regulators at the time of the interest rate manipulation case a year ago.

Sandy Chen, banks analyst at Cenkos, said the Ferc fine could trigger a review of the non-prosecution agreement with the department of justice from last July. He cited two elements of the agreement which stated that for two years the bank would "commit no United States crime whatsoever … and bring to the fraud section's attention all criminal or regulatory investigations, administrative proceedings or civil actions brought by any government authority in the US by or against Barclays or its employees that alleges fraud or violations of the laws governing securities and commodities markets".

Barclays to fight US power fine in the courtsThe allegations by the Ferc date back to 2008 so it was not immediately clear if they fell under the terms of the Libor agreement with the DoJ. Barclays said the allegations by the Ferc were one-sided and did not provide a "balanced and full description of the facts or the applicable legal standard".

Four former Barclays employees, Daniel Brin, Scott Connelly, Karen Levine and Ryan Smith, are required to pay fines – $15m in the case of Brin and $1m each for the others – for building positions in the electricity market to manipulate index prices. In an 85-page document Ferc used emails between the four to set out its case, in which they talked about "propping up" an electricity index. In another Connelly is alleged to have "laughed" at suggestions he risked being reported to the commission about his activities.

Barclays argued that the correspondence had been "cherry picked".

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

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