Barclays' rate bungle could cost it £100m
Some 300,000 people who took out personal loans through Barclays are in line for compensation worth hundreds of pounds after the bank admitted it had made mistakes on their paperwork.
Barclays miscalculated personal loan interest rates over five years from October 2008. Victims of the mistake could be in line for an average payout of £330, meaning the error could cost the bungling bank £100m.
If mistakes are made in loan paperwork, all interest paid must be returned. The problems could prove to have spread even wider, Barclays admitted. The bank is now investigating whether similar mistakes have been made in other parts of its business, such as its credit card company Barclaycard.
Barclays came in for widespread criticism during the reign of former chief executive Bob Diamond for a series of scandals, the extra interest charged being the latest legacy of his years in charge.
The problem relates to errors on arrears notices and statements and was described by the bank as "technical documentary errors". In a statement, Barclays said: "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."
The bank said it would begin to contact customers affected within the next month.
Gillian Guy, chief executive of Citizens Advice, said: "This latest banking error will serve as a further setback in restoring customer trust in the banking industry. Barclays is right to review whether other customers may have been incorrectly charged interest for other products. Any mistakes must be put right quickly."
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