Borrowers to lose £200m payouts after Barclays spat

UP To 80,000 Barclays misselling victims could lose out on a £200m compensation pot because of a courtroom battle over how to pay them back.

They were wrongly pressured into taking out a costly insurance product for their credit cards with the bank more than a decade ago – and could be due more than £2,500 each.

Their accounts were part of a business called monument, which was sold by Barclays to Us finance firm CCUK in a 2007 deal before the scandal came to light.

When CCUK realised many of its new customers had bought the toxic insurance, Barclays agreed to cover the cost of compensating them and has so far paid 120,000 victims at a cost of £350m.

But last may, CCUK decided its decision to buy the portfolio had been a mistake and launched a legal case to get its money back. CCUK claims that in response, Barclays stopped funding compensation payments in august.

sources say CCUK has since shelled out £10m a month of its own money to refund victims but is no longer willing to do so.

It has sought a High Court ruling to make Barclays begin repaying customers again – and warned that if this fails it will stop handing out cash and victims could be left with nothing.

Labour mP John mann, a member of the Treasury select Committee, has written to the Financial Conduct authority asking it to protect consumers. The mis- selling victims were sold a so- called payment break product (PBP), which allowed them to suspend card repayments if they lost their job or fell ill.

But many buyers were hassled into signing up and some did not understand the fees they would be charged for it. Barclays insists payments were suspended because CCUK stopped providing it with the information needed to deal with requests and started asking for money without showing there were valid claims.

a spokesman said: ‘ our priority is for customers who were mis-sold PBP to be compensated. 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.’

a CCUK spokesman said: ‘Barclays’ refusal to continue to compensate customers for its own mis-selling is a cynical move that puts consumers’ interests at risk. Its tactics have one purpose only – to put financial pressure on us and suppress this litigation.

‘The bank is terrified that its systematic mis-selling of debt waiver products is about to be exposed. It has good reason to be.’

The FCa declined to comment.