Financial Guidance and Claims Bill [HL]

Written evidence submitted by Barclays (FGCB28)

Dear Sir/Madam,


Barclays written evidence: Financial Guidance and Claims Bill

Barclays welcomes the opportunity to provide written evidence in support of the House of Commons Public Bill Committee on the Financial Guidance and Claims Bill. In particular, we would like to share the following data regarding the treatment of Packaged Bank Account (PBA) complaints under Part 2 of the Bill. We believe an extension of the interim fee cap on Claims Management Companies (CMCs) to include PBA complaints as well as PPI complaints is strongly supported by these figures. 


Whilst we welcome the interim PPI fee cap for CMCs and Legal Services providers introduced to the legislation in the House of Lords, we are deeply concerned that – as currently drafted – the Bill exempts Packaged Bank Account (PBA) complaints from the scope of this important consumer protection.  We believe that the PPI and PBA complaint markets are not only similar enough to warrant equal treatment, but that there are significant additional consumer benefits to be achieved by ensuring that PBA complaint fees are capped in the same way.


We support the extension of the cap to PBA complaints for the following reasons: 

1. It will put money back in consumers’ pockets: Based upon Barclays’ insight, our modelling estimate s that at an industry level, customers could receive additional redress payments of £21m if an equivalent PPI fee cap of 20% (+ VAT) were in place for PBA complaints.  These figures assume a start date of a PBA fee cap from the 1 June 18 until end of year 2019, when we believe the PBA market will have significantly reduced.  This redress could be being paid directly to customers and not to third parties who, our experience shows, do little to merit such significant remuneration.


2. The PBA and PPI complaints markets are very closely aligned – it makes sense to regulate them both together:

a. It will be the same firms impacted by a PBA cap, as by a PPI cap: We can see a clear correlation between CMCs handling PPI complaints also handling PBA complaints.  In Q4 17, for the 100 largest CMCs that submitted PPI complaints, two thirds (67%) of these CMCs also submitted one or more PBA complaint within the same period.  Our analysis also shows that of all the PBA complaints made by CMCs in June 17, approximately 20% also had a PPI complaint within the same date range. By contrast, there are very few CMC or legal services providers who submit PBA complaints alone.  This means that most of the firms impacted will already be implementing systems changes to deliver the PPI fee cap.  It makes sense to ensure that PBA customers are protected to the same degree, at the same time. To do otherwise could mean customers are paying different amounts for any compensation paid, despite the services received being similar, if not identical. This is confusing and inequitable.

b. Overlap between the markets is driving complaint volumes: Barclays data shows that where a PBA complaint has been logged, 20% of customers also submitted a PPI complaint within 100 days.  Some CMCs actively seek consent from customers to submit both PPI and PBA complaints on their behalf at the same time – for the largest 10 CMCs in Q4 2017 who handling Barclays PBA complaints, 3 of them have customer authorities that specifically cite the CMC has the authority to submit both PPI and PBA complaints, and 2 further CMCs have customer authorities which are broad enough to enable them to submit mis-sold financial products.  This clearly demonstrates that firms themselves are treating the two markets as the same.


Extending the scope of the legislation to cap PBA claims can be achieved quickly and easily by adapting the language in Part 2, Clause 28 of the legislation, to change all references to "PPI" to "PPI or PBA".


We would strongly support the amendment of the Bill to achieve this.


If you have any questions regarding the above, please do not hesitate to get in touch.

February 2018


Prepared 6th February 2018