Barclays will pay in-full all of its customers' payment protection insurance (PPI) claims that were put on hold on or before 20 April.
The bank revealed today it will pay out on all PPI mis-selling claims by that date that Barclays sat on – in line with most other banks – pending the result of a judicial review into complaints handling. This applies to all its brands, including Barclaycard and First Plus. No other banks have said they'll follow suit.
It has already set aside £1 billion to pay claims. Meanwhile, some other banks will get an extension to the usual eight-week period they have to resolve PPI complaints.
On 20 April, the British Bankers' Association (BBA) lost the case in the High Court in which it failed to overturn Financial Services Authority (FSA) rules that force banks to contact and compensate those mis-sold PPI as a result of systemic failings.
Regardless who flogged you the policy, if you were mis-sold, it's vital to get a claim in as there is no guarantee your lender will contact you (see the PPI reclaiming guide for template letters).
How much will complainants get?
Mis-selling victims will get the following back:
- a full refund of PPI premiums paid;
- any interest paid on those premiums;
- an additional 8% per annum interest;
- any compensation will be reduced by the value of any previous redress and any previous PPI refunds where a loan was settled early.
They will get a cheque or a credit to their current account, plus interest.
- Barclays claims on or before 20 April to be paid
- Customers to get interest on PPI back
- Plus, 8% per annum interest
- Other banks get more time to resolve complaints
Barclays says it is not admitting liability and is simply offering payments as a gesture of goodwill.
When will payment be made?
Barclays and the Financial Ombudsman Service, which arbitrates on disputes between banks and financial firms, will send out letters this week to affected customers.
A further letter will be sent by 31 August with full payment details.
What about new complaints?
All PPI complaints received on or after 21 April will be assessed as normal, in accordance with the new FSA rules, so a payout is not guaranteed.
What about already-rejected complaints?
Barclays says it has yet to determine policy here, such as whether it will contact those who it deems were mis-sold as a result of a systemic failing who have already unsuccessfully claimed.
However, it says it will listen to re-started complaints from all those previously rejected.
If you're in that boat and believe you were mis-sold, get your claim back in. Given the U-turn by the industry on PPI, you now have a greater chance of success (see the PPI reclaiming guide for template letters).
MoneySavingExpert.com creator Martin Lewis says: "This move by Barclays will be welcome relief for many who wrongly paid £1,000s for policies that were unsuitable. It completely ups the ante.
"Other banks are saying they'll only route out cases of systemic mis-selling, leaving others still to make their own claims. This shows there is another way and it should be done.
"However, of course it does leave an 'i' or two to dot and a 't' to cross. What about those who were rejected in the past, how will Barclays treat them?"
Extension for other banks
The FSA has also today agreed to temporary arrangements to extend the time period Barclays, Lloyds Banking Group and RBS have to deal with their backlog of PPI complaints.
Under FSA rules, complaints have to be resolved within eight weeks.
But the massive backlog of complaints means many cannot be resolved in that time-frame, so the FSA has granted the extension to the trio, after they asked for more time.
Here are the new requirements for Lloyds and RBS:
- PPI complaints still with the firm but put on hold during the judicial review will now need to be resolved by the end of August.
- Complaints received after the conclusion of the judicial review but on or before 31 August must be resolved within 16 weeks.
- All complaints received on or after 1 September and before 31 December 2011 must be resolved within 12 weeks.
Barclays has a slightly different mandate as all PPI complaints received between 21 April and 31 July must be resolved within 16 weeks and complaints received between 1 August and 1 October have a 12-week deadline.
All new PPI complaints received after 1 October 2011 will fall within the standard eight week resolution period.
Of course, many Barclays complainants will be automatically compensated.
Margaret Cole, from the FSA, says: "We want to see all PPI claims for compensation dealt with swiftly and appropriately.
"Some firms are facing a huge backlog and now a surge of new complaints which has created a bottleneck. It is not in the interests of consumers to receive further poor handling of their complaints as a result.
"This temporary extension means that these firms can process these complaints properly and fairly.
"We will be monitoring their progress carefully to ensure the new deadlines are met, that complaints are dealt with as promptly as possible and the backlog is cleared as a matter of urgency."
A Barclays spokesman says: "Working in close co-operation with the FSA and the FOS, and in recognition of the delay customers have experienced whilst awaiting the outcome of the High Court judgment.
"We can confirm that we are contacting customers whose complaint was put on hold on or before 20 April with an offer to settle their complaint in full as a gesture of goodwill."