Barclays faces fresh controversy

Barclays Bank is facing yet further controversy over its regulations with regards to refunds on cancelled payment protection insurance policies (PPI).

Over recent months regulatory bodies in the UK have enforced new regulations with regards to refunds on these policies to ensure that consumers who decide to cancel their policies receive a fair refund, as in the past refunds that have been issued for cancellation of PPI have been notoriously low.

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According to representatives and trade associations working with banks and lenders many have been taking these new regulations on board for many months, despite the fact that they were not actually published until March. However, it seems that Barclays is not one of these banks, as a recent investigation has shown that the banking giant continues to offer minimal refunds on cancelled insurance policies as illustrated by one complainant who took out a loan and PPI policy with the bank.

The complainant claims that she took out a loan for just over £25,000 over a fifteen year period. She also agreed to take out PPI, which cost £6000 and was added to the loan.

However, after just seven months the customer cancelled the loan with the bank and asked for the PPI to be cancelled and for a refund to be issued. However, the only refund that was offered was under £1900, which meant that the customer had paid over £4000 for an insurance policy for just seven months.

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When the complainant asked for an explanation from the bank she was simply told: 'The features of the policy were carefully explained to you and it was made clear that the premiums would be added at the outset. In addition, our agent also advised you that if you settled the loan early, you would not receive a full cashback, the refund would not be proportional and there would be no refund of interest on the premium…. In the circumstances I am unable to agree that you are entitled to claim a refund of the settlement fee for your PPI cover.'

Tom Smith
13th June 2007