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Thousands of Barclaycard customers set for redress

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30/10/2020
Thousands of Barclaycard customers are due to receive redress after their credit limits were set too high.

Letters of apology are being sent along with an average £230 redress to thousands of customers whose credit limits were set higher than they should have been.

Crucially, the refund will only be made to those who have experienced a negative impact on their circumstances because of the credit limit issue.

Barclaycard credit limit

In August, Barclaycard confirmed it wrote to customers apologising for setting credit limits too high and included a number for them to call to discuss the matter, particularly where it had had an impact on their circumstances.

While a larger credit limit may sound good, the problem comes when people struggle to make the minimum payments. By paying the minimum amount, the debt amount and term is extended.

According to regulator, the Financial Conduct Authority (FCA), lenders should make sure a higher credit limit is “affordable” before they increase it.

But Barclaycard acknowledged that it “did not always meet the expected standards for assessing a customer’s situation” which resulted in a “minority of cases” having had the limit set higher than it should have been.

What do Barclaycard customers need to do?

Where Barclaycard’s analysis indicates a particular customer has been negatively impacted by the credit limit issue, it is writing to them to apologise and confirm that a refund of relevant interest, fees and charges which were applied to the account during that period will be made.

For other customers where its analysis has not identified a negative impact, letters of apology will be sent and recipients will be able to let Barclaycard know if they feel their credit limit has led to a negative impact on their circumstances or whether they have incurred any losses.

Barclaycard said it will assess cases on an individual basis.

It added customers don’t need to take any action until they’re contacted by it; the vast majority have received a letter already or will receive one soon.

The average redress is £230 which will result in the reduction of existing debt.

A Barclaycard spokesperson, said: “An internal review of our operating procedures for credit card limits highlighted that we did not always meet the expected standards for assessing a customer’s situation, meaning that not all of the customer’s circumstances and/or finances may have been considered as part of their application. As such, in a small minority of cases, a limit was set that may have been higher than it should have been at the time.

“In order to put things right, we conducted extensive analysis to identify any customers whose credit limit may have had a negative impact on their circumstances. We are writing to these customers to apologise for what has happened and to confirm that we will refund the relevant interest, fees and charges which were applied to their account during that period. We have taken, and continue to take, significant steps to review and improve our systems, processes and training to ensure we provide the excellent service our customers rightly expect.”

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