A pair of influential MPs has warned Barclays Bank that they should not shut down a compensation fund for the mis-selling of ‘debt waiver’ products.
The bank is due to appear in the High Court in February after being challenged over halting payments of compensation over the potential mis-selling of payment break plans (PBP) to tens of thousands of credit card holders.
Lib Dem leader, Sir Vince Cable, and John Mann, of the House Of Commons Treasury Select Committee, are urging the bank to keep the fund open to avoid becoming caught up in a potential scandal ‘on a par with PPI mis-selling.’
The issue relates to the selling of PBPs during the 2000s by Barclays now defunct Monument brand. Using the product, customers were charged a fee for suspending credit card payments.
The Monument credit card book was bought in 2007 by CompuCreditUK (CCUK) and Barclays has already paid out more than £350 million in compensation through CCUK to approximately 120,000 consumers.
But now CCUK is taking Barclays to court over an alleged move last August to stop making the payments.
It claims to have ‘ample evidence’ that the bank ‘specifically targeted vulnerable credit card customers with… manipulative sales techniques’ and that there are a further 80,000 more customers still entitled to compensation.
Barclays denies the allegation entirely and is counter-suing CCUK for £321.4 million, claiming CCUK had overpaid compensation to mis-selling victims, including some invalid claimants.
A spokesperson for Barclays said: “Our priority is for customers who were mis-sold PBP to be compensated.
“We have been doing this for many years, paying out more than £350m to CCUK to enable them to compensate their customers.
“CCUK is now standing in the way of that compensation by refusing to cooperate with simple requests we have made for information since September last year. We don’t understand why they have done that and we hope they change their minds so we can get back on track.”
Sir Vince says he is concerned over how widespread the practice of mis-selling payment break plans could be.
He said: “This is potentially a scandal on a par with PPI mis-selling, with hundreds of thousands of people affected.
“Barclays must clarify its potential exposure to payment waiver mis-selling. It seems unlikely that such mis-selling could be restricted to a single bank, so the other high street lenders must also investigate their payment break sales policies from this period.”