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Barclays fined £26m for failing 1.5 million customers in financial difficulty - and borrowers have been refunded

Barclays has been fined £26 million by the financial regulator over the poor treatment of 1.5 million borrowers who had fallen into arrears or financial difficulties over a period of four years - and affected customers have also been refunded. 

The failures at Barclays came to light in 2018 when it agreed to refund some loan and credit card borrowers who had fallen behind on payments, after failing to have appropriate conversations with them about their debts and offering them unaffordable repayment solutions. 

Refunds to the collective tune of £273 million have been paid, with average payouts of around £180. Barclays today said that the "large majority" have now been given redress - see below for more on this process. The lender's £26 million fine was reduced by 30% from £37.2 million due to paying out refunds. 

If you're struggling with Debt Problems, see our guide for what to do and where to get help.

What went wrong at Barclays?

The Financial Conduct Authority (FCA) found that between April 2014 and December 2018, some individual and small business customers who had been offered loans or credit cards by Barclays weren't treated properly when they fell into arrears. It found that Barclays hadn't treated customers fairly or acted with "due skill, care or vigilance". 

In practice, this meant that Barclays: 

  • Failed to follow its own policies on contacting customers who had fallen into arrears.
  • Failed to have appropriate conversations with these customers, which would have helped it understand why the customer had fallen into arrears. 
  • Offered help to customers in arrears which was unaffordable or unsustainable, because it hadn't properly understood their circumstances. 

The FCA says Barclays had already identified some of these problems as early as 2014, but further failures in its systems and controls meant the issues weren't fully fixed for several years.

Though Barclays doesn't have a standard definition for deciding who is classed as being "in arrears", it says it follows FCA guidance on the issue - and this typically defines arrears as a shortfall in one or more payments that a customer had agreed to make. 

All firms offering consumer credit products should take proper steps to understand their customers' circumstances and show forbearance where customers are struggling financially - and this is even more crucial now, as the coronavirus pandemic continues to affect people's finances. Without appropriate support, customers who are in arrears could end up prioritising making payments on a loan or credit card when they should be focussing on paying a "priority debt", such as a mortgage, council tax, child support, or utility bills. 

Will I be paid redress? 

Affected customers were sent letters from Barclays between 2017 and this year apologising for what happened and confirming the redress they would receive. This took the form of a refund of any interest, fees and charges applied to their account during the period when service from Barclays had fallen short. 

Barclays says the average refund will be around £180 per customer - it had originally estimated customers would get around £300 on average, but says it has since widened the scope of the redress scheme meaning typical payouts have dropped.

As most affected customers had ongoing debts with Barclays, their redress would have gone towards writing off part of what they owed. If customers no longer owed anything, the money would have been applied to their accounts - though Barclays says that if a customer had since closed their account, it is reliant on them to provide their new account details. Once it has this information, it will process the refund "as soon as possible". 

The FCA has monitored the redress programme and says it is now "almost complete". Barclays says the "vast majority" of affected customers have been contacted, and any remaining customers will hear from the lender in due course - though it couldn't confirm how many are still waiting for refunds.

If you think you might be affected but haven't heard anything, or you have questions about your refund, you can contact Barclays on 0800 328 6932 between 8am and 6pm from Monday to Friday. 

What does Barclays say?

A Barclays spokesperson said: "Since the issue was first identified, we have implemented a number of changes to our customer journeys, systems, processes and colleague training to correct it, and the vast majority of customers who were impacted have already been contacted. We would like to apologise to those customers for not providing the level of service we should have."

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