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Barclays sets aside another £1bn for mis-selling redress

by Alex Steger on Feb 05, 2013 at 07:34

Barclays sets aside another £1bn for mis-selling redress

Barclays has set aside a further £1 billion to pay redress to customers mis-sold payment protection insurance (PPI) and interest rate swaps.

Barclays had previously made a provision of £450 million for interest rate swap redress, but announced a further £400 million had been put aside following the findings of a recent Financial Services Authority probe, and the onset of its own internal review.

The bank also announced plans to set aside a further £600 million for PPI redress, bringing its cumulative PPI provision to £2.6 billion.

16 comments so far. Why not have your say?

complacency rules

Feb 05, 2013 at 08:27

The total amount must be several year's staff bonuses. Bonuses based on profits arising from deliberately falsified figures, mis-selling etc. Surely these bonuses should be clawed back. The customers and the shareholders have been the subject of fraud. Why are the regulators not taking criminal action against the perpetrators? Oh I forgot the Senior Regulator is now receiving a huge payoff, sorry salary, from Barclays.

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Feb 05, 2013 at 08:28

Yes, previous bonuses should be clawed back

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Usually found sitting on the fence

Feb 05, 2013 at 08:36

Thinking about it, the shareholders have equally gained out of this, so perhaps the dividends paid during this time should also be clawed back!

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complacency rules

Feb 05, 2013 at 08:42

@ Usually found sitting on the fence

The shareholders did not set the dividends, whereas the executives did set the bonuses, which were paid even when there were losses. The shareholders are already paying due to reduced share values and several years of no dividends (or dividends less than the bonuses paid). As far as the shareholders are concerned the effects have been felt and will be felt for many years. Many of those who received the bonuses have taken the money and gone, such as Bob Diamond, John Varley, and numerous others.

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Usually found sitting on the fence

Feb 05, 2013 at 09:22

@ Complacency Rules - I appreciate that and the comment was more a question as where does it end? Those who are Barclays shareholders now are paying the price and those who were shareholders then benefited, so should it not be fair that those who received dividends from inflated profits, as the owners, repay this? (please read on to see my actual view)

Let's just be clear on what I think should happen:

Directors and top level managers should be returning their bonuses (either in full or part)

Former Directors and top level managers should be returning their bonuses (either in full or part)

Investigations into the practices of all the current and former Directors and top level managers to identify the willful from the negligent, with appropriate subsequent actions

The next level of management to go through a similar process as above along with the Investment bankers and so on.

Staff with no managerial responsibility, with no selling responsibility to be left alone. Staff who sell to be managed internally according to their appropriate rules and with the appropriate consequences. Their actual fate would depend on the outcome of their management structure and whether they were an active party or just negligent. Where your manager is an active party, you will perhaps have some leniency in terms of pressures you were under. If your manager was just negligent then you should be considered more accountable for your actions.

Shareholders - no action, obviously. Apologies for the first comment, it was supposed to read more tongue in cheek (it's early, what can I say!!)

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Barney Stackhouse

Feb 05, 2013 at 09:23

Given the astronomical figures involved and the obviously endemic and entrenched culture involved, the regulators should just step in and ban these institutions from being involved or licensed to provide 'advice' er, sorry sell products in any of these areas. If this sort of thing had gone on in any other financial services business they would have been taken out of the industry. Oh and of course I agree with Complacency Rules that we've seen the 'gamekeeper' (not that he ever successfully stopped any 'poaching') turn potentially 'poacher' by moving in to the pay of one of the biggest serial offenders! You couldn't make it up. LMFAO.

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Feb 05, 2013 at 09:30

@ usually

What about the other execs who left. This culture goes back to at least two chief execs before Varley, one of which was the darling of New Labour. My contention is what do you have to prove that PPI was sold correctly? It now seems that as an insurance, it will never be sold again by anybody. This is a shame as it certainly benefitted borrowers who were made redundant or had sickness lasting more than 4 weeks. I guess the poor employees of HMV, Comet and Jessups may now be worrying about how they are going to pay for their car or camera etc. As advisers one of our basic principals is to ensure clients are protected where possable, when the unexpected happens. Therefore we promote life, critical illness, income protection and waiver plans to ensure the welfare of our clients is maintained where possable. If you say that in order to be sold any insurance, rather than buy without advice, you must jump through so many hoops, taking more time than a client allocated, then the cost is so great that the premiums spiral and no-one is protected. This will probably mean the end of policies that are underwritten at claim, rather than in advance, the type we advise on.

The level of mis-selling for PPI really only effected some 10% of customers, but anybody, even those who made a successful claim, seem to get compensation. There are so many bogus claims nowadays that the claimants should be forced to pay for the FOS fees, but no, the evil banks can pay!

This whole episode just proves the verocious appitite of the lawyers and claims management firms are the real winners. The losers are the banks, the recently redundant, you and me (as we sometimes get tarred by the same brush) and everyone else who will pay more for an unprotected loan and get less and less understanding of the need to insure and plan for their future.

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Julian Stevens

Feb 05, 2013 at 09:57

If the FSA had done its job properly and focussed its attention on what are unarguably, and by a huge margin, the most significant risks of consumer detriment, instead of strangling the life out of the IFA sector by way of totally excessive and disproportionate regulation, much of this could have been averted.

Instead, what we're now seeing is massive damage to the reputation of and public confidence in the industry. Meanwhile, intermediaries are being forced to charge clients ever more for their services and to produce reams of reports for the simplest of transactions, most of which clients aren't interested in receiving and even less interested in trying to read and understand. That's certainly the feedback I'm getting from my clients.

And as for these stupid GABRIEL returns what, if anything, does the FSA ever do with them? Many IFA's I talk to enter any old data just to get the system to accept the return, yet we hear that the FSA is planning to make them even more complicated and burdensome for no better reason than to tie up those charged with completing them in even tighter knots. It's just red tape and bureaucracy for its own sake, one of the FSA's particular specialities.

For its part, the FSA refuses to accept any of this, ploughing grimly ahead with its own unaccountable agenda in the blinkered and arrogant belief that it's actually improving the ways in which the industry functions. It isn't. All it's doing is making everything worse for everyone.

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complacency rules

Feb 05, 2013 at 10:11

@ usually

I did say and others.

Of course there was and is a place for PPI. the problem was not so much the product (although the version sold by the banks tended to be very expensive) it was the sales process. It was inappropriate for many clients, the sale was not based on best knowledge of the client, and it seems that many banks gave the impression that it was a pre-condition of the borrowing.

If the banks can demonstrate that the sales process was conducted properly then I assume that they can resist any claim. However, I do accept that many people and claims management companies are jumping on the band wagon and that is wrong. However, the Banks have set themselves up for this.

Until recently the real winners were the banks who made billions of extra profits, and whose executives were paid huge bonuses. The banks are now reaping what they sowed. I would just like to see the senior individuals responsible be punished. We must remember that it is not just PPI but other mis-selling, aggressive tax savings schemes, LIBOR fraud, money laundering irregularities, doubts about Barclays Far East funding, and a host of other things. PPI mis-selling is indicative of the whole culture of arrogance and willingness to bend (and break) the rules which needs to be addressed.

Lets have a big clear out, criminal prosecutions, claw backs of bonuses etc as that will encourage the rest to be on their best behaviour in the future.

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Feb 05, 2013 at 10:29

As l have said many times before, "targets" and the legal requirement for best advice to be given, are incompatible.

This is just one of the consequences.

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Jonathan Kirby

Feb 05, 2013 at 10:34

Sack the head of compliance I say!

Now who would that be now, let me think?

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Michael Brown

Feb 05, 2013 at 11:57

@ Complacency

Unfortunately the courts have degreed that all PPI was missold so every one can claim. Not, as Hikky states, only around 10% were missold. I can list numerous clients that thank goodness the bank sold them PPI or they would of been up the creek without a paddle.

Never mind the daily rags can conclude we did this and saved all this money without ever thinking of the implications that are now becomming apparent where people have no cover.

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Chris Geeson

Feb 05, 2013 at 12:01

Had a bad day with your FSA returns Julian.

I wonder if Mr Sants is getting slightly worried that he has now got responsibility rather than tut tutting what the banks were doing when at the FSA. How long will he get before it starts to become his fault oh of course ex FSA I expect the bill any day now then.

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Julian Stevens

Feb 05, 2013 at 12:18

As a network member, I don't have to do them but every DA colleague, without exception, to whom I speak about them reports them to be a horrible and extremely time-consuming half yearly chore, not helped by the fact that the system itself is (reportedly) a very badly designed and difficult to use crock of the proverbial.

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Feb 05, 2013 at 14:01

@ Michael B

So the courts, judged by lawyers, stated that all PPI was missold Not because the product did not benefit the customer, but because an over complex system, designed, in retrospect, by lawyers through an opinion of an interpretation of rules that were published in a 1.4 million line rule book, were not adhered to by lenders. So the instigaters of this whole sorry mess can be firmly laid at the door of the regulator, who hinted at, but not approved of, a system that was felt would be appropriate for the sale of these non investment insurance products.

Who can blame Lawyers for saying 'Listen here lads, if we can convince Mr Justice Ouseley to find against the banks, lawyers can have a field day claiming compensation fees for everyone'. 'The Banks are loaded, and the Judge is an acedemic who only judges on the case in front of him, regardless of the wider implications'. 'It's party time!'

Mis selling, according to most people nowadays, seems to be the sale of a product without all the regulatory boxes ticked. Is this the definition that should be accepted, or is the client's needs that ought to take preference? If the client did not need, or could not benefit from, the policy, then that is misselling in my mind. If a customer was sold a policy he or she needed by persuasion or implication of consequenses, is that misselling? It sounds like traditional sales practices to me! Yes it smacks of a double glazing salesman, an energy supplier's sales force or a street charity fundraser, but if these sales practices are OK for them, what is so different about non investment insurance? Just a question.

Do the rules of 'Caveat Emptor' no longer apply to the British public? Why do they need protecting with full refunds against this fairly innocuous breach of an arbitrary rule? I guess I should ask the Judiciary, not this forum.

When there are so many crooks and Fraudsters about, sucessfully parting the desperate and gullible from their money, hiding behind corporate entities, overseas structures and non regulated status, why oh why do we spend so much effort on castigating the banks when we could be catching and prosecuting the real crooks.

Oh, I know why! It's because they made huge profits and lawyers know there is loads of money to pay their bills. The crooks? Where is the profit on that?

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Michael Brown

Feb 05, 2013 at 14:11

@ Hikky

Sums it up about right!

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