Parliamentary Commission on Banking StandardsWritten evidence submitted by Barclays

Introduction

Barclays welcomes the opportunity to address a number of questions raised by the Parliamentary Commission on Banking Standards (the “Commission”) on the mis-selling and cross-selling of retail products, which focus on Payment Protection Insurance (PPI). As the Commission has acknowledged, there has been limited time for us to compile our responses so we have sought to provide the most complete response we can, focussing on issues that occurred between 2000 and 2012 in relation to our UK business. We would be pleased to provide further information if required.

As part of our response, the Commission has asked us to consider whether the FSA’s submission accords with our regulatory experience. Our submission explores this in further detail, but we would note in our introductory comments that while we acknowledge the factual accuracy of the FSA’s timeline of key regulatory events, we have a different view in some cases of the FSA’s interpretation of the actions the industry took and the rationale that underpinned them. In relation to Barclays, we are keen to emphasise that, from 2005 onwards we maintained a very active and transparent dialogue with the FSA. This is illustrated by our proactive engagement on many issues, the actions we took following feedback from, for example, the FSA’s thematic reviews and the significant number of Close and Continuous meetings held with the FSA (and more latterly with the FOS).

Notwithstanding that we designed controls, which were shared with and, we understood, were supported by the FSA, to reflect the standards we believed were in place at the time, we acknowledge that instances of mis-selling occurred (as detailed in our response to Question 10). When we discovered these, we quickly sought to provide redress to affected customers, understanding that we had failed to meet the standards rightly expected of us. We did not believe that we were engaged in the widespread mis-selling of PPI. At the conclusion of the Judicial Review proceedings and the clarity they provided, we moved swiftly to set up a programme to provide redress and proactively contact customers whose sales we believe might not have met the regulatory standards.

While we have at all times sought to behave as a responsible bank that has had the best interests of consumers at heart and has sought to comply with the spirit as well as the letter of our legal and regulatory obligations, we recognise that recent events, including but not limited to PPI, have not reflected that and indeed have undermined trust in Barclays. We are keen to take sustained and demonstrable action to reassure customers that we are even more resolutely focused on their needs. As part of this, it is critical that we review our procedures and our approach and ethos and demonstrate that we are taking all possible steps to ensure we mitigate against the risk of future mis-selling. As detailed in our response to Question 20, we have taken a number of steps to this end at both strategic and operational levels. This includes removing sales-linked incentives for front line employees; measuring the performance of business units on customer outcome metrics as well as financial performance; and sharing the design of proposed new products with the FSA.

We have made important progress to date but recognise that we need to go further to achieve our goal of becoming the “go-to” bank. We are about to launch and embed a refreshed set of values and behaviours; introduce a balanced scorecard across the bank which measures business units and individuals on how they support our values as well as financial performance; and we continue to strengthen our controls and governance. In addition, an important contribution will be Anthony Salz’s independent review of banking practices at Barclays. This global review is currently assessing our values, principles and standards of operation in order to determine to what extent these need to change.

We understand that to regain trust we must go further than our efforts to date and embed a culture that delivers the right outcomes for customers in the right way. This is our key focus.

1. A summary of the history of PPI sales at your bank from origination of the idea to now (including a tabular chronology of key events). Please specify key decisions that were made by: product development or product approval committees, risk or compliance committees, internal audit committees, complaints committees, Senior Executive committees, Board committees and the main Board. Please also specify the date of these meetings and the chair of the meeting

Chronology

1.1 A tabular chronology of key events in the history of PPI sales at Barclays Bank PLC (“Barclays”) is enclosed at Appendix 1. A Glossary is provided at the end of this submission.

1.2 Between the early 1980s and 2010, Barclays sold PPI products (both regular and single premium) to its customers through a number of sales channels. PPI was an optional insurance policy available to be taken with loans, mortgages, overdrafts, credit cards or store cards that would cover customers in certain circumstances if they could not meet their repayments due to an insured event that could include involuntary unemployment, illness, accident, disability, or death dependent on the cover offered by the product.

1.3 Barclays UK Retail Bank and Barclaycard are business units within Barclays. FirstPlus, which closed to new business in 2008, is part of the Barclaycard business unit and is also a separate legal entity authorised by the FSA.

PPI products

1.4 PPI was sold alongside Barclays credit products through all of the bank’s sales channels, namely branch, telephony, direct marketing and internet.

PPI governance

1.5 Barclays had input into product development and design and policy terms and conditions. Barclays operated a vertically integrated business model whereby from 1997–98 the majority of PPI provided by Barclays to its customers was underwritten by Barclays Insurance (Dublin) Limited and Barclays Assurance (Dublin) Limited (together “BID”). BID worked closely with other parts of the Barclays group and was represented in a number of Barclays governance structures (see below). BID, which was regulated independently by the Central Bank of Ireland, also had its own Board, with independent Non-Executive Directors and Operational Committee.

1.6 Over time, Barclays governance structure relating to the product development and distribution of PPI has evolved. The oversight and decision-making bodies on PPI have consistently included representation from both management and control functions. Many of the governance structures were cross-divisional and covered all Barclays PPI sales including matters relating to FirstPlus.

1.7 Prior to 2005, decisions in relation to Barclays PPI portfolio were made through its established Group or business unit governance structures. PPI will have been discussed in the Group-wide governance structures created under the Group Internal Control and Assurance Framework (GICAF) such as the Business Unit Governance & Control Committees.

1.8 For the purposes of implementing the FSA’s Insurance Conduct of Business handbook (ICOB) in 2005, specific PPI-related governance structures were developed, triggered by the N(M&GI) Programme which was a project structure for the development of the necessary system and process changes for implementation of the Mortgage Conduct of Business handbook and ICOB. Until around 2007, FirstPlus took PPI decisions in its own governance structures with less interaction, save for reporting, with other parts of the Barclays Group.

1.9 Key governance structures are described below:

	Period:	Name:	Escalation to:
2005 to early 2007	Mid-2005 to May 2007	PPI Overview Committee	Business Unit Executive Committees as appropriate/PPI Supervisory Committee from September 2006
	September 2006 to March 2007	PPI Supervisory Committee	Business Unit Executive Committees as appropriate
Early 2007 to 2009	March 2007 until December 2009	PPI Policy Board	Cross Divisional Product Oversight Committee
	March 2007 until February 2009	Cross Divisional Product Oversight Committee (“CDPOC”)	Business Unit Executive Committees for key operational/risk issues Governance & Control Committees for control issues of cluster/group level significance

1.10 The PPI Overview Committee was established in mid-2005 for the purposes of reviewing and challenging all aspects of the introduction, underwriting, marketing and administration of PPI products. Its remit included responsibility for certain remediation exercises such as Project Hugo.

1.11 In 2006, Barclays established the 5 Pillars Policy, a set of policies for the Barclays PPI product offerings. The objective of the 5 Pillars Policy was to define the minimum standards required for:

(A)Product (the design of PPI to meet customers’ needs);

(B)Sales Process (the promotion, introduction and distribution of PPI products);

(C)Training & Competence (the training and competence of employees involved in the sale of PPI products);

(D)Claims & Servicing (claims and servicing in respect of PPI products); and

(E)Compliance & Monitoring (compliance and monitoring of PPI to ensure compliance with regulations).

1.12 The PPI Policy Board, which was instituted following a 2007 governance review by the PPI Overview Committee, had two core duties:

(A)overseeing the 5 Pillars Policy; and

(B)approving actions arising from any analysis undertaken on any PPI regulatory finding or publication.

1.13 The PPI Supervisory Committee was established as a cross-divisional executive committee, providing the executive decision forum for all product, risk and regulatory issues.

1.14 CDPOC was responsible for deciding issues of cross-divisional significance in relation to Barclays products generally and specifically acted as an escalation point for the PPI Policy Board (and other forums at the discretion of the Chairman). CDPOC engaged with and escalated issues, as necessary, to the relevant Business Unit Executive Committee.

1.15 Various formal and other working groups and forums were also involved in PPI-related activities and engaged with the governance structure outlined above. These included:

(A)a PPI Programme, overseen by a PPI Programme Steering Committee, which was set up to develop and implement PPI products (for example, the introduction of tailored PPI) in response to risks and issues arising out of, but not exclusively, regulatory intervention and/or internal audit and regulatory compliance findings. This steering committee also oversaw remediation programmes undertaken in relation to proactively identified problems with PPI sales (for example, Project Hugo in 2006);

(B)a Product & Claims Quality Forum which oversaw the Product and Claims & Servicing Pillars within the 5 Pillars Policy framework, including monitoring ongoing product quality and co-ordinating approval of product design and pricing proposals;

(C)a Barclaycard General Insurance Steering Committee which oversaw the effectiveness of the Sales Process, Compliance & Monitoring and Training & Competence Pillars;

(D)a UK Retail Bank Sales Quality Board which oversaw the effectiveness of the Sales Process, Compliance & Monitoring and Training & Competence Pillars; and

(E)a Regulatory Development Group responsible for co-ordinating the identification and completion of all actions arising from feedback from regulators.

1.16 In addition, Barclays PPI portfolio was considered at Barclays TCF Oversight Forum meetings which reviewed the impact on customers of products and sales processes by reference to the Barclays Treating Customers Fairly Guiding Principles and considered product developments (such as tailored PPI and developing a greater range of regular premium PPI products). The TCF Oversight Forum operated at a Group level and included senior representatives from across the bank. It identified and made recommendations in respect of TCF issues (for example, in February 2008, considering concerns identified within the bank and FirstPlus PPI offering; recommending that the term of the loan and PPI policy should always match; and that customers should have a choice of regular, as well as single, premium PPI). Further TCF Forums also operated at business unit level.

1.17 Governance & Control committees (at both group and business unit level), at which PPI-related issues were considered, provided a forum for material control risks and issues to be discussed by business, senior management, regulatory compliance, Internal and External Audit and Risk representatives.

1.18 The Board of Barclays Bank PLC and the Group Executive Committee received and considered reports on PPI. However, the majority of decisions in relation to PPI were taken by the committees, forums and groups identified above.

PPI product development and changes to sales processes

1.19 We have summarised, in Appendix 2, a number of key PPI product developments and changes to the PPI sales process. These included, by way of example:

(A)In early 2005, customer demands and needs questions in relation to eligibility and suitability were introduced for the sale of PPI through Barclays automated decision engines.

(B)Enhancements were made to the decision engines with revisions to the scoring approach to include more targeted recommendations in response to the FSA’s November 2005 Thematic Report and Dear CEO Letter.

(C)Between January and May 2006, a new Control Framework was agreed with the FSA, which led to changes to the standard terms and conditions across the entire Barclays PPI product range in order to make the product more inclusive and consistent across the product range. Examples included ensuring greater suitability and continued eligibility for all customers beyond the age of 65; and making other benefits such as Accident, Sickness and Hospitalisation available to customers not working at the date of the claim, subject to maximum limits in place.

(D)The development from 2006 of tailored PPI products which offered customers a choice of protection levels, tailored to their situation. The tailored PPI products were launched in stages varying by PPI product and sales channel during 2007 and 2008.

2. An organogram outlining how the above referenced committees linked to each other and link to the Board

2.1 Please see Appendix 3.

3. A summary of how your bank sourced the PPI product(s) it sold (for example, were they manufactured in-house, through a joint venture or via a third party?) and describe how this may have changed over time

3.1 PPI policies were underwritten as set out in the table below. In particular:

(A)Before 1997, Barclays UK Retail Bank and Barclaycard PPI were underwritten and administered by a third party, Consolidated Financial Insurance Group (“CFIG”). From 1997 or 1998, depending on the type of PPI, the underwriting of all new PPI policies was provided by BID. All PPI policies already in force were migrated to BID for administration.

(B)When Woolwich was acquired in 2000, Barclays acquired its unsecured loans book and the Open Plan Mortgages (as well as the ability to sell Woolwich mortgages to Barclays customers). Policies sold alongside Woolwich mortgages after 2000 (through the Woolwich and Barclays branches) were underwritten by BID.

(C)FirstPlus PPI was underwritten by a third party, Cassidy Davis Underwriting Agencies Ltd (“Cassidy Davis”), from March 1999 to January 2005 when BID replaced it. FirstPlus was acquired by Barclays as part of the Woolwich acquisition in 2000.

Product	ABI (1988–2002)	GISC (2002–04)	ICOB (2005–08)	ICOBS (2008–10)
Single Premium
Unsecured loans—Barclays	CFIG until 1998 BID from 1998	BID	BID	(until Jan 2009) BID
Unsecured loans—Woolwich	(acquired 2000) London & Edinburgh Insurance/Aviva	BID	BID	BID
Secured loans (FirstPlus)	(acquired 2000—with Woolwich) Cassidy Davis	Cassidy Davis	(until Aug 2008) BID took over underwriting of new policies from Jan 2005	−
Regular Premium
Credit cards—Barclaycard	CFIG until 1998, BID from 1998	BID	BID	(until early 2010) BID
Credit cards—Affinity relationships	CFIG until 1998, BID from 1998	BID	BID	BID
Mortgages—Barclays/MortgageCare	CFIG until 1998 BID from 1998	BID	BID	BID
Mortgages—Woolwich (Open Plan)	(acquired 2000) London & Edinburgh Insurance/Norwich Union/Aviva	BID	BID	BID
Regular premium PPI on Unsecured loans	−	−	−	(from May 2009) BID
Overdraft	CFIG until 1998, BID from 1998	BID	BID	BID
Fair and Square secured loans (First Plus)	−	−	−	(January to August 2008) BID

4. Please summarise the training that was in place for all staff selling PPI and through a tabulated chronology how this may have changed over time

4.1 We have prepared this response based on training documentation available for the period.

4.2 Since 2001, Barclays has operated a generic training scheme for sales of all products, including PPI. Before selling PPI, front line employees would receive specific system and product training. This was further developed in 2003 with the introduction of the General Insurance Standards Council (GISC) framework. Training was given in respect of the revised requirements and these changes were further reinforced with the introduction of sales standards in 2003.

4.3 Training developed over time, particularly as a consequence of the introduction of ICOB in January 2005 which required employees to be trained by reference to the standards set by a wholly new regulatory regime. This was achieved through the introduction of a Training & Competence Scheme, which ensured that front line employees were required to undergo specific training for the products they were selling and achieve internal accreditation status by passing training tests. The training programme at an individual employee level was overseen by accredited supervisors to ensure compliance with the Training & Competence Scheme.

4.4 Training consisted of training presentations; coaching cards; sales standards; General Insurance product handbooks; channel specific information; and sales scripts. Training materials included generic training materials across business units and products and specific materials for each product (for example, specialist mortgage training). Post 2005, training courses included videos and role plays which were recorded and played back to employees.

4.5 Key elements of training included:

(A)Sales standards:

(1)Sales standards were introduced in August 2003 during the GISC period and were developed over time to reflect changes, such as the introduction of ICOB and ICOBS and developments to the product. The “Sales Standards document” set out details of the Training & Competence Scheme and the employees to which the scheme applied;

(2)Each sales channel (branch, telephony and direct marketing) had its own specific sales standards in addition to the general sales standards and product specific training, such as specialist training for mortgage advisors, was also undertaken; and

(3)Prior to and after the introduction of sales standards in August 2003, Barclays communicated details of its GISC membership to employees and required them to comply with its standards, including, for example, providing PPI application process and GISC membership aide memoires.

(B)The Training & Competence Scheme for PPI was introduced in January 2005 following the introduction of ICOB. Its key purpose was to provide a framework to ensure:

(1)new to role employees were provided with sufficient skills, knowledge and support to perform their role;

(2)employees’ skills were maintained and regularly assessed;

(3)all employees under the scheme were appropriately supervised; and

(4)customers were treated fairly.

(C)An accreditation process/route to competence which broadly consisted of three stages:

(1)Stage one: Employees received copies of both a Product Knowledge Workbook and a Sales Process Workbook. There were separate versions of these for telephony, branch and mortgages. Employees would be required to complete tests based on these Workbooks in order to show knowledge and understanding of the Workbook content and gain their accreditation;

(2)Stage two: The employee would be required to perform role plays of the sales process; and

(3)Stage three: At least on a quarterly basis, employees were monitored by first line and/or second line supervisors to perform checks on the employee and maintain accreditation.

4.6 Specific examples of training activities are set out below.

Period	Examples of training materials/activities
Prior to 2005 (GISC)	—	“PPI Application Process (aide memoire)” and “GISC Aide Memoire —Introduction to GISC” May 2002 which reminded branch sales employees that completion of the aide memoire and use of the mandatory statement (about GISC) was a compliance requirement. The aide memoire set out questions to allow employees to assess customer suitability of the product to match customer needs and reminded employees of the need to convey facts such as features and exclusions of PPI (for example, minimum age 18, UK residency, pre-existing conditions and benefits).
	—	General Insurance (GI) Handbook and PPI Handbook issued by BID in 2003 which included information as to who is eligible for PPI and how to apply for PPI products. The Handbook included the “GISC compliant introduction process for PPI”, cancellation and complaint procedures and all relevant information and documentation needed “to introduce and discuss PPI competently”.
	—	Sales Standards (High Quality Compliant Sales) August 2004, which were designed specifically for sales employees and sales managers, set out the sales standards which must be adhered to and including acceptable and unacceptable sales practices. Specific reference is made to the sale of PPI and that employees must follow the steps of the GISC compliant process to ensure PPI was being offered to customers with a genuine need. Further training on GISC compliance was provided.
	—	“Right First Time” Training document which stated that PPI must be introduced on a needs-related basis and was not a condition of the lending product. It stated that it was unacceptable to introduce PPI on the basis that a customer can cancel in 30 days as this breached the GISC code and the bank’s guidelines.
2005 (ICOB)	—	Sales Standards 2 (Retail Sales Guide) which defined the sales standards to which employees must adhere in order to comply with ICOB. The Sales Standards were part of the Training & Competence Scheme and any employees who were involved in the selling or supervision of General Insurance were subject to the Scheme. The Guide required employees to sign and confirm they had read all sections of the pack and understood the requirements.
	—	PPI Sales Questions Demands & Needs which set out questions the advisor is required to ask the customer when carrying out the demands and needs assessment and possible responses and statements that may be read to the customer.
2006 (ICOB)	—	PPI Enhancements: an internal document circulated to all General Insurance sales employees to notify them of the detailed PPI enhancements that were being made retrospectively to all live policies sold prior to January 2005, effective from February 2006.
	—	The Barclays Network Product Knowledge Workbook 2006 which was accreditation training material for sales advisors and outlined the PPI products available; the eligibility and suitability criteria for these products; and exclusions, limitations and benefits.
	—	Sales standards for mortgage specialists v2.3 Max 2 (01.06) was a training workbook for mortgage advisors. It included information relating to statements of demands and needs, statement of price, guide to insurance and material facts disclosure.
2007 (ICOB)	—	PPI Price Disclosure Enhancement Briefing Manual—March 2007: was an update to the PPI Sales Process with new wording for Price Disclosure to be implemented by March 2007.
	—	Sales Process Coaching Card V2.0 explained the process to be followed when discussing Barclayloan PPI with a customer.
	—	FirstPlus Product Knowledge Payment Protection Insurance—v17.04.2007 was a workbook given to sales employees to complete as part of assessments to assist in developing product knowledge whilst assessing competence.
2008 (ICOBS)	—	Sales Process Coaching Card V3.0 was an updated version of the previous Sales Process Coaching Card.
	—	Recommendation & Product Disclosure script was a one page script setting out the demands and needs assessment and how to proceed after the recommendation was made. This related to single premium tailored PPI.
	—	Tailored MortgageCare Product Launch (Retail Mortgage Sales) (03.08) was a training workbook which described in detail the MortgageCare product and the sales process of the different levels of mortgage payment cover/income cover available to customers.

5. Please summarise any incentive schemes that were in place for all staff selling PPI and through a tabulated chronology, if appropriate, how this may have changed over time. Please explain to what extent Executive Director and Senior Executive incentive schemes were impacted by PPI sales and how this may have changed over time

Introduction

5.1 Prior to 2005 in Barclaycard and 2007 in the UK Retail Bank, we believe that employees did not participate in explicitly sales-linked incentive plans relating to PPI. Instead, employees were eligible to be considered for discretionary annual bonuses.

5.2 Sales-linked incentive plans were operated by Barclaycard between 2005 and 2009 and the UK Retail Bank between 2007 and 2010 in which sales of PPI, among other products, were recognised. Similar incentive plans were operated by FirstPlus prior to 2005 until 2008.

5.3 Senior executives did not participate in sales-linked incentive plans. Sales of PPI and other products could indirectly impact the level of bonuses paid to individuals.

5.4 Further details are provided below.

(i) UK Retail Bank

Annual discretionary incentive awards (prior to 2007)

5.5 Prior to the use of sales-linked incentive plans from 2007, all UK Retail Bank employees were eligible to be considered for discretionary annual bonus payments. Bonuses were based on the annual appraisal of an employee’s individual performance and behaviours, as well as team, business unit and Group performance. These employees did not have targets.

5.6 Bonuses were paid from overall Retail Banking bonus pools and not from specific product- linked funding. Historically the value of the Retail Banking bonus pool has been a very small fraction (c.2%) of Retail Bank revenues, to which sales of any single product contributes a small proportion.

5.7 PPI penetration rates (ie the proportion of all lending which included PPI) were a factor for senior branch network management when comparing performance across regions. For sales-based employees, the assessment of performance was based on overall performance across all customer sales products (including PPI) as opposed to performance in relation to individual transactions. Neither sales targets nor penetration rates were communicated to front line sales employees. However, due to the focus placed on PPI sales by the senior branch network management, the sales employees in the branches would have been aware of the importance placed on PPI sales.

5.8 As with other products from time to time, PPI was the subject of recognition campaigns which were run both nationally and locally at key times during the year to encourage specific product sales focus including lending with PPI and other product sales.

Sales-linked incentive plans (2007 onwards)

5.9 Plans explicitly rewarding PPI transactions were first introduced for sales employees in 2007.

Overall, PPI-related incentives would be in the order of about 5% of incentive payments earned by branch employees.

5.10 The incentive plans recognised sales on a number of sales or a value of sales basis and applied to a range of products, including PPI on Barclayloans, Barclaycards and mortgages. The inclusion of PPI on overdrafts was not incentivised. The value attributed to products varied depending on a number of factors, including, for example, profitability, the overall sales plan or the strategic importance of a product.

5.11 Employees in various customer roles were eligible to participate in these plans. Within the UK Retail Bank participants were Personal Bankers, Premier Managers, Woolwich Mortgage Advisors and Telephony Agents. Other roles (eg Cashiers, Branch Managers, Area Directors) could receive credit in their own incentive plan for the sale of PPI made by colleagues as part of overall Branch and Area performance, but were not directly incentivised to sell PPI products to customers themselves.

5.12 Employees were also eligible to receive a fixed (ie not related to the value of the sale) payment for good customer service and customer satisfaction achievements.

5.13 From 2007 to 2009 inclusive, a direct clawback mechanism was operated in respect of these sales-linked incentive payments such that no incentive payments would be received where customers cancelled their product or closed their account shortly after purchase or opening (ie where the customer exercised his or her rights under the product “cooling off” provisions).

5.14 Incentive payments could also be reduced to zero on the basis of a broader assessment of poor performance. Reductions of this nature were made by line managers at their discretion following an assessment of performance against conditions which supported Barclays commitment to Treating Customers Fairly.

5.15 Arrangements in relation to telephony employees were substantially similar to those applicable to branch-based employees save that sales-linked incentives were only payable to employees achieving sales/transactions whose value exceeded a particular threshold figure.

(ii) Barclaycard

5.16 Before 2005, sales performance was managed through the Performance Development (PD) process. In this model, employees were allocated sales targets as part of their overall performance scorecard, and would be measured as “Off Track” (had not achieved target), “On Track” (achieved target) or “Outstanding” (materially exceeded target) for that single scorecard element. Overall remuneration for employees was based on their overall performance scorecard, in line with standard performance rewards at that time.

5.17 Between 2005 and 2009, sales-linked incentive plans were introduced whereby employees were awarded points for every transaction completed across the range of financial products offered, including PPI. At monthly intervals, these points were measured against targets, and payments were awarded on the basis of the ratio of the points accrued against target.

5.18 As with the UK Retail Bank, incentive payments could be reduced to zero for poor performance.

(iii) FirstPlus

5.19 Prior to 2008, FirstPlus relevant sales-linked incentives reflected the overall PPI penetration level on the volume of loans completed.

5.20 Customer Account Managers participated in the sales-linked incentive scheme and incentive award eligibility criteria were measured on achievement of targets based on transaction volume and PPI penetration. The average payment to an employee for a PPI sale was £100. There was a cap on the incentive related to penetration rates set at 85%. Clawback provisions operated so that £100 was deducted from the following month’s incentive payment if a PPI policy was cancelled during the 30 day “cooling off” period. There were measures to reduce incentives due to upheld complaints, customer satisfaction scores and number of loans that did not meet the FirstPlus lending criteria.

5.21 In March 2008, a new scheme was introduced which included a greater emphasis on performance and quality control based on conversion, file errors, upheld complaints and customer satisfaction surveys. There were also measures to reduce incentives to sales employees.

(iv) Senior Executive Incentive Schemes

5.22 Senior executives did not participate in the sales-linked incentive plans. Instead, these individuals were eligible to be considered for an annual discretionary bonus. Individual bonuses awarded were based on an annual assessment of a senior executive’s individual performance and behaviours, as well as team, business unit and Group performance.

6. With regard to the finances of the PPI product, please describe income, costs (including claims) and this product profits. Please use a tabulated chronology, if appropriate, to show how this may have changed over time

6.1 XXX

6.2 XXX

6.3 XXX

6.4 XXX

6.5 XXX

7. How far was the development of this product originally influenced by wider public policy objectives? Where a public policy objective did exert influence what did your bank perceive that objective to be?

7.1 PPI was first sold by Barclays in the early 1980s and was designed and underwritten by third parties. Given the passage of time, Barclays is not now able to establish how the development of PPI was originally influenced by wider public policy objectives.

8. What were the perceived consumer benefits of PPI and who were the perceived beneficiaries?

8.1 As noted in paragraph 1.2 above, PPI provided consumers with valuable insurance cover in certain circumstances if they could not meet their repayments due to involuntary unemployment, illness, accident, disability or death. These policies provide security to consumers and financial support at times when consumers are facing financial difficulties.

9. What information sources or controls were in place to monitor whether PPI was being sold appropriately? How, if at all, did this change over the period 2000 to 2012, and did these processes identify that PPI was being mis-sold?

9.1 Barclays deployed a range of methods, controls and information sources as described below. These led to certain issues being identified and remediated.

Information sources and controls in place from 2000 to 2012 to monitor whether PPI was being sold appropriately

9.2 Reviews of PPI sales were undertaken by branch managers and supervisors observing sales advisors and by telephony supervisors listening to calls during the sales process.

Training & Competence and Accreditation

9.3 Please see the response to Question 4 above.

Sales Standards

9.4 Please see the response to Question 4 above.

Technology development

9.5 Barclays developed a number of systems-based processes over the years and made significant investment in technology post-2005 which enhanced the control environment. A major system development introduced in January 2005 to cater for the specific regulatory requirements introduced by ICOB was the decision engine. This provided an automated solution to establish the suitability or otherwise of a PPI product for individual customers. Changes to the decision engine were overseen by the PPI Policy Board and were independently reviewed by Ernst & Young. Barclays made significant improvements to the controls around the PPI application process for advised sales—via a series of enhancements known as Consistency & Control around early 2006. These enhancements were designed to ensure that a credit product with PPI should not proceed without 1) the completion of demands and needs questions; 2) a positive recommendation; and 3) a positive customer decision.

Three lines of defence

9.6 Barclays maintained “three lines of defence” in relation to compliance testing of PPI sales against the regulations in place since the introduction of ICOB in 2005.

9.7 As to the “first line of defence”, prior to 2005, controls were in place to detect mis-selling and act as a deterrent as sales employees knew they were being monitored. Starting from 2005, the “first line of defence” operated through a number of controls including:

(A)business management supervision and oversight (line manager, area manager, regional manager);

(B)written checklists of steps to complete in order to make a sale, which were sample checked;

(C)for telephony sales, extensive sales call listening, which involved reviewing recorded telephony sales to check quality;

(D)“welcome calls”, introduced in 2007, involved calls to new customers who had purchased PPI from the branch network shortly after the sale;

(E)local conformance testing of the above; and

(F)management information, including penetration rates and quality metrics for individual employees.

9.8 This information was also aggregated and reported to PPI governance committees such as CDPOC (see also the response to Question 1).

9.9 As to the “second line of defence”, compliance monitoring was undertaken by independent Regulatory Compliance functions. PPI monitoring was performed by teams in the Regulatory Compliance functions of UK Retail Bank and Barclaycard (inclusive of FirstPlus). The review included listening to sales calls and welcome calls. Regulatory Compliance dashboards were also part of the second line of defence (see paragraph 9.11 below).

9.10 The third line of defence was the Internal Audit function. The team performed risk-based reviews of key areas of concern.

Examples of Management Information

9.11 Various dashboards were developed to provide management information on findings by control functions to the PPI governance committees, such as CDPOC (see also the response to Question 1).

9.12 Key control measures reported on the dashboards were:

(A)net written premium = amount of premium received against new policy sales;

(B)overall penetration rate = % of PPI sold against total product sales target;

(C)% of cases assessed as competent or competent with development = % of calls monitored where the sale has been determined as competent or competent with development;

(D)% of required supervisory observations carried out = % of required observations carried out by the supervisors as set out in the Training & Competence minimum standards;

(E)% of supervisory 1:1s carried out = % of required 1:1s carried out by the supervisors as required by the Training & Competence minimum standards;

(F)number of sales on a DNR = number of policies sold where the decision engine returned a Do Not Recommend response;

(G)number of sales without a SoDN = number of policies sold where a statement of demands and needs was not generated;

(H)sales process complaint volumes = number of complaints related to the sales process;

(I)PPI cancellation rate (within cancellation period) = cancellations within 30 days as % of all new policies sold that month (statutory cooling off period);

(J)PPI cancellation rate (outside cancellation period) = cancellations outside 30 days as a % of all live policies;

(K)PPI claim rejection ratio = % of claims rejected; and

(L)% of sellers reaccredited as at [date] = % of sellers who have been reaccredited.

Governance

9.13 For a description of the governance framework, please see the response to Question 1.

External Information Sources

9.14 Barclays consistently monitored FSA and other external publications for coverage of PPI-related issues, conducting gap analyses and taking remedial action where necessary (see also the response to Question 10).

Did the information sources and controls reveal mis-selling?

9.15 Some cases of mis-selling were discovered at various points in time and were remediated as soon as possible. Barclays maintained a close dialogue with the FSA in relation to such matters, and we believe we met the FSA’s expectations as matters progressed.

9.16 Please refer also to the answer to Questions 10 and 12.

10. At any stage did the bank decide to review PPI mis-selling? If so please describe the nature of reviews, ie how reviews were conducted, by whom, what conclusions were reached and what changes were made. With regard to any changes to the way PPI was sold please identify the decision making body and its chair

10.1 See Appendix 5 for instances of mis-selling reviews conducted by the bank prior to the Judicial Review decision. These relate to separate issues, discovered through the control framework. Although we have attempted to identify all known significant examples, in the time available to prepare this response we have not been able to ensure that all examples have been captured. We discuss a number of these reviews below.

Project Hugo remediation—2006 onwards

10.2 Project Hugo was initiated in Q4/2006, largely as a result of the findings from the implementation of Barclays automated decision engines in January 2005. Customers’ responses to various questions were captured on Barclays systems, a score was assigned to each response and depending on the total score for all questions, the decision engine would make a recommendation on PPI—Recommend (R), Recommend With Caution (RWC), or Do Not Recommend (DNR). Issues were discovered relating to implementation of these recommendations in practice which included products being sold to some customers who were ineligible and some other incorrect recommendations. This applied to UK Retail Bank and Barclaycard.

10.3 Project Hugo was set up mainly to review the impact of the decision engine, under the governance of the Project Hugo Project Board. The Project Board commissioned a review to determine whether there were any other operational or sales issues relating to PPI, and as a result the project scope was extended.

10.4 As a result of the review, affected customers with a DNR outcome from the decision engine were offered refunds. Barclays also enhanced controls to monitor ongoing sales to prevent this issue arising in the future.

10.5 Barclays updated terms and conditions to ensure that those customers who had not had some product exclusions explained to them were not disadvantaged.

10.6 Key aspects of Project Hugo were subject to independent quality assurance by Ernst & Young.

10.7 The FSA was notified and kept informed on a regular basis of the scope and findings from the review.

FirstPlus whistleblowing incidents in 2006 and 2008

10.8 In July 2006, the FSA informed Barclaycard of a whistleblowing incident that was reported by a FirstPlus employee to the FSA in relation to FirstPlus PPI sales. The allegations were referred to Barclays Group Regulatory Compliance for investigation. Members of Group Regulatory Compliance and the Barclaycard Legal team went to Cardiff to undertake an investigation.

10.9 In October 2006, the investigation concluded, among other things, that changes were required in respect of governance, regulatory compliance, monitoring, remuneration policies and sales processes. It proposed for example a review of all sales processes, and the establishment of a FirstPlus Risk Committee.

10.10 In November 2006, the FSA made a visit to FirstPlus and conducted a PPI thematic review. On 15 January 2007, the FSA issued a letter confirming the findings following their PPI thematic review visit to FirstPlus. The letter required action to be taken in a number of areas, namely:

(A)review of the sales remuneration scheme to introduce more direct links to quality measures;

(B)review and enhancement of management information;

(C)enhancement of the monitoring framework;

(D)review of the Training & Competence scheme to improve generic product knowledge; and

(E)review of sales scripts to further enhance transparency of disclosure around features and benefits.

10.11 On 31 January 2007, Barclaycard replied to the FSA and indicated that it was working towards resolving the issues identified. After the investigation, changes were made to the senior management of FirstPlus and other material areas of the operation, including to the structure of the incentives scheme which had been identified as a significant issue, and the other areas highlighted by the FSA.

10.12 During the regular meetings held between Barclaycard Regulatory Compliance and the FSA to discuss progress on the issues identified above, no further material issues regarding the PPI product or the relevant parts of the sales process were raised at that time.

10.13 In Q2 2008, there was a further whistleblowing letter to the FSA relating to FirstPlus. A report was prepared by Barclays Internal Audit dated 2 July 2008 into the allegations raised by the February 2008 whistleblowing letter to the FSA, which concluded that the allegations were not substantiated.

FirstPlus FSA ARROW visit and Barclays Legal and Regulatory Compliance review in 2009

10.14 Following the FSA’s ARROW visit in 2008, a team from Barclaycard Legal and Regulatory Compliance (LRC) were required to undertake an investigation into the historic PPI sales practices of FirstPlus in 2009. Key aspects of the LRC review were also independently validated by Ernst & Young.

10.15 The LRC review found issues in parts of the sales process, such as written price disclosure, verbal price disclosure and explanation of the cashback feature (see Appendix 5).

10.16 Further action was put on hold pending the outcome of the Judicial Review because this could materially affect next steps for the industry. This approach was communicated to the FSA. Following the Judicial Review, the findings from the LRC review (2009) were factored into the Barclays Root Cause Analysis which recommended proactive customer contact. FirstPlus stopped selling PPI in August 2008.

FSA Mystery Shopping/Project Valentine—2009

10.17 In 2007–08, the FSA carried out a mystery shopping exercise in branches and identified sales that, in their view, did not meet regulatory requirements. Their key concerns related to disclosure in the sales process, in relation to matters such as refunds for early cancellation, suitability and price.

10.18 Barclays queried some of the FSA’s findings, and, after discussion with the FSA, Barclays set up Project Valentine in Q2/2009 to undertake a pilot customer contact exercise to determine whether sales after July 2007 were appropriate. Project Valentine was put on hold when the Judicial Review commenced because, again, the Judicial Review could materially affect the project. This approach was also communicated to the FSA.

Changes to the way PPI was sold

10.19 For changes made to the way PPI was sold over the period, please see the response to Question 1 and Appendix 6.

11. What actions were taken in response to external reports of mis-selling by bodies such as WHICH?, the FSA and FOS?

11.1 As detailed in our response to Question 17, Barclays has actively responded to external reports of mis-selling by external bodies which has resulted in various changes to the product and sales processes as outlined.

12. Details of when the bank became aware that PPI was being mis-sold, including details of any involvement of the Board and the control functions within the bank in discovering mis-selling

12.1 Please refer to the table at Appendix 5, which addresses the times at which Barclays became aware of some PPI mis-selling issues and the role played by the control functions in identifying mis-selling. Although we have attempted to identify all known significant examples, in the time available to prepare this response we have not been able to ensure that all examples have been captured.

12.2 Prior to the Judicial Review the bank identified some mis-selling issues (see our response to question 10 and Appendix 5). We accepted the judgment from the Judicial Review and have undertaken actions to implement the consequences of that judgment. (We set out in Question 20 below the strategic and operational changes we have also made.)

12.3 The rejection of the BBA’s application for Judicial Review in April 2011 provided clarification of the standards relating to PPI complaint-handling and the powers of the FSA in that regard. Following the High Court judgment in the Judicial Review proceedings, the Board convened and resolved not to support an appeal and to create a provision for payment of redress to complainants of £1 billion. That provision has since been increased to £2 billion.

12.4 Prior to the FSA Policy Statement 10/12 (“PS10/12”),1 the bank’s governance in relation to PPI was primarily conducted below Board level through the dedicated structures outlined under our response to Question 1.

13. A timeline of the action the bank took, both externally and internally, when it discovered it was mis-selling PPI

13.1 Please refer to the responses to questions 9, 10, 12 and 20.

14. What sanction, including clawback of remuneration, have you placed on any staff that were involved in mis-selling PPI? Please indicate the level within the organisation at which these staff were working. Please also indicate whether or not the bank continues to employ them and, if not, whether they are working in an FSA controlled function at another regulated firm (according to the FSA’s register of Approved Persons)

14.1 Sales employees who consistently did not meet relevant sales standards were penalised either through clawback or through disciplinary action.

14.2 Further, the Barclays Retail and Business Banking division’s 2011 total incentives funding pool was reduced partly due to the impact of PPI. In addition the PPI provision negatively impacted the vesting level of the long-term incentive plans that vested at the end of 2011. We are currently considering the 2012 total incentives funding pool.

15. What discussions did the bank have with its External Auditors about PPI mis-selling and on what dates?

15.1 XXX

15.2 XXX

15.3 XXX

16. Why, in your opinion, did the market fail to “correct” the mis-selling of PPI?

16.1 As we have set out in our responses to Questions 10 and 12 above, Barclays did take action to address the mis-selling that it identified, keeping the FSA informed of its progress.

16.2 PPI went from being unregulated (prior to 2005) to being heavily and prescriptively regulated by ICOB (from 2005 to 2008), and was then made subject to a new and more detailed set of regulation in ICOBS (from 2008). Barclays opinion is that, until the outcome of the Judicial Review, the market in general had understood that the relevant regulatory standards were those set out in detail in ICOB and later ICOBS, and the market largely adhered to those standards. That understanding was, at least until 2008, reinforced by the FSA’s involvement because, although the outcomes of the FSA’s thematic reviews were that certain changes were required, the FSA had not concluded that there was widespread mis-selling. The market viewed the FSA’s identification of more widespread issues as a change of position by the FSA, and considered that the FSA was imposing standards (ultimately in the form of PS10/12) that were more onerous than, and inconsistent with, the requirements set out in ICOB and ICOBS. This resulted in disagreement between the industry, and the FSA and FOS, as to the standards applicable to historical sales of PPI, and ultimately led to the Judicial Review proceedings brought on behalf of the industry by the BBA.

16.3 As an example of the difference between PS10/12 and the requirements set out in ICOB advanced by the BBA on behalf of the industry in the Judicial Review, was that the Open Letter, which accompanied PS10/12, regarded it as a sales failing not to disclose to a customer, in good time before a sale was concluded, and in a way that was fair, clear and not misleading, that the customer would not receive a pro rata refund if the customer were to repay or refinance the loan or otherwise cancel the single premium policy after the cooling-off period. There were never any rules or codes of practice specifically requiring firms to disclose refund terms before the completion of a contract. There was an agreement reached between the FSA and the industry in 2006 that firms using the standard risk-weighted single premium refund should disclose the refund terms in policy documents. Policy documents did not have to be provided to customers under ICOB until after most face-to-face sales.

17. At what stages during the period your bank sold PPI did regulatory intervention cause the product to be reviewed? What was the substance of those reviews and what changes were implemented as a consequence of those reviews? With regard to the FSA report on PPI in 2005, what action was taken at all levels of the bank from the Board downwards?

17.1 We have summarised PPI-related regulatory intervention and Barclays response to it in Appendix 6.

17.2 In response to the request to share our thoughts on whether the FSA’s submission to the Commission accords with our regulatory experience we would make the following points:

(A)From the start of the FSA’s consultation on ICOB through to the present day, we have actively engaged with the FSA in a constructive and transparent manner and have been keen to ensure that we meet their expectations of us as a regulated firm;

(B)At the time of its introduction, ICOB was a significant, new and detailed set of rules compared to the previous GISC regime. As a result, Barclays launched a year-long programme with very considerable investment to ensure that new processes, systems and controls were put in place to address ICOB requirements. The introduction of ICOB specifically involved designing and implementing a new Training & Competence scheme which involved a formal accreditation for employees, updating all documentation, the introduction of decision engines, developing a suite of systems and controls and meeting the range of other new requirements;

(C)In terms of proactive action we took over the period, please see our response to Questions 9 and 10 which outlines our control framework and management information which highlighted issues to us and which led us to conduct internal reviews and remediation exercises (such as Project Hugo). We shared these controls with the FSA and had no reason to believe that they did not reflect the regulatory standards in place at the time;

(D)We led the way on industry initiatives such as the introduction of automated decision engines in 2005 (to assess the suitability of PPI on a case by case basis) and welcome calls in mid-2008 (to assess whether a customer understood the product they had bought) plus the introduction of tailored PPI products which allowed customers to select which aspects of cover they wanted; and

(E)Moreover, we responded extensively to findings from FSA thematic and other reviews with the addition on occasion of engaging third parties (which overlaid internal assurance functions) to substantiate that we had resolved issues appropriately. When we look back at this period we do not accept that Barclays was resistant to the changes suggested and requested by the FSA and in fact we were constantly seeking to understand any concerns that the FSA may have had regarding how we were meeting their expectations.

17.3 In assessing the strength of our compliance with the current regulatory standards, we paid most attention to the regular dialogue we were having with the Barclays Supervisory Team at the FSA. This was notwithstanding our awareness of the action that the FSA was taking against a number of firms selling PPI. Any concerns applicable to Barclays held by the Thematic Team were not communicated to us by the Supervisory Team until late in 2008.

17.4 Barclays was also fully engaged in initiatives led by the British Bankers’ Association, such as the establishment of a common standard for clarification of the methodology and calculation of rebates when loans were settled early; facilitation of an agreement with the FSA on the issues of premium refunds and Mortgage Payment Protection Insurance premium increases; and seeking to agree a Statement of Principles on PPI complaints handling with the FOS and the FSA in late 2008.

18. To what extent did regulatory interventions alter the way PPI was sold by your bank? Please summarise where any of these interventions may have given rise to a view within your bank that sales process were [fit] for purpose.

18.1 We have summarised PPI-related regulatory intervention and Barclays response to it in Appendix 6. This includes changes to sales processes.

18.2 Enhancements were made over time continually to improve those sales processes on Barclays own initiative and in response to our continuing dialogue with the FSA. Where issues were identified with the design of our sales processes, these were improved upon in open discussion with our regulators. As highlighted above in our response to Question 10, from time to time, we did identify operational failures of our internal controls that led to instances of mis-selling and we took appropriate remedial action commensurate with our findings.

19. What was your Board and Executive Committee’s assessment of t he root causes of PPI mis-selling at your bank. Please provide minutes of any discussions about root causes that took place at Board and Executive Committee.

19.1 Our controls in the period prior to 2005, ie before ICOB was introduced, were not strong enough. Post 2005, the controls gradually improved as a consequence of increased investment in skills and resource.

19.2 With regard to the PPI mis-selling issues identified mainly post 2005, as set out in our response to Question 10 above and Appendix 5, the root causes of those incidents are varied. They include, for example:

(A)incentives for selling PPI sometimes encouraged wrong behaviours;

(B)incorrect design and execution in relation to certain aspects of PPI decision engines;

(C)ineffective operation of the three lines of defence at times; and

(D)our interpretation of regulatory expectations in the area of “propensity to refinance” (in line with other banks) was determined to be incorrect.

20. What has the bank done to address the root causes of PPI mis-selling? What has been done to prevent mis-selling happening in the future?

20.1 We have taken a number of steps to address root causes and to mitigate against the risk of future mis-selling, both at the strategic and operational levels.

20.2 Going forward, across the UK Retail Bank and/or Barclaycard we are rolling out the following changes:-

(A)At the strategic level:

(1)Fundamentally, we have recognised that we must give greater weight to the achievement of fair customer outcomes when measuring the performance of business units;

(2)The introduction of the Lives Made Much Easier (LiMME), originally in UK Retail Bank and Barclaycard and now across the entire group, puts the customer at the heart of what we do. We measure good customer outcomes through the “4 Cs”: Colleagues, Customers, Company and Citizenship. This applies to both existing and new products, and is designed to ensure customers receive the right outcomes;

(3)We have made important progress to date but recognise that we need to go further to achieve our goal of becoming the “go-to” bank. We are about to launch and embed a refreshed set of values and behaviours; introduce a balanced scorecard across the bank which measures business units and individuals on how they support our values as well as financial performance; and we continue to strengthen our controls and governance. In addition, an important contribution will be Anthony Salz’s independent review of banking practices at Barclays. This global review is currently assessing our values, principles and standards of operation in order to determine to what extent these need to change;

(4)Governance oversight has been enhanced to ensure higher levels of transparency on quality results associated with sales practices. For example, the introduction of Business line and Product “Councils” within the UK Retail and Business Banking division which include not only business representatives, but also importantly control function representatives;

(5)We are strengthening the influence and authority of the second line of defence. For example Barclays recently appointed Sir Hector Sants as Head of Group Compliance, Regulatory Affairs and Government Relations, reporting directly to the Barclays Group Chief Executive, Antony Jenkins, and we are increasing compliance resources; and

(6)The UK Retail Bank is one of the first major banks to remove sales- linked incentive plans for front line employees.

(B)At the operational level:

(1)We have improved our new product approval process to ensure appropriate customer outcomes are achieved;

(2)We have introduced and are rolling out a formal process of mandatory product reviews across the Barclays group to ensure a regular “stress test” of our existing products from a customer-outcome viewpoint;

(3)We are taking steps to strengthen further our control assurance activities in Barclaycard, for example, hiring Business Unit Control Officers;

(4)In relation to complaints which are upheld by the bank, or rejected by the bank but subsequently upheld by the FOS, we have a process for ongoing iterative root-cause analysis;

(5)We are maintaining significant and regular engagement with the FSA and also the FOS. This includes sharing the design of new products and services with the FSA at the concept stage; and

(6)We consult widely with consumer groups including Citizens Advice Bureau and Which?.

21. PPI is a product that was cross-sold alongside another product. Please provide details of retail products you currently commonly cross-sell

21.1 PPI was a product specifically linked to another product. We no longer sell any product which is linked to another in this way. As we explain in our response to Question 22, we consider the needs of the customer in discussion with them, and whilst we do not have a formulaic approach, there are some products that are naturally complementary. For example, customers are often interested in obtaining life cover with a mortgage.

22. Please explain the advantages of cross-selling and risks arising from cross-selling from both the bank’s standpoint and the customer’s. Describe how you mitigate against any risks arising from cross-selling

22.1 When customers are considering their overall financial needs they may often benefit from understanding our wider product offerings. For example, a customer opening a current account may want to open a savings account. In addition, a customer may want to compare their existing insurance policy with another company with the Barclays equivalent product. Barclays has a process (supported by a document named a Customer Discussion Document: CDD) that enables us to identify with the customer the needs that they wish to address. The CDD is designed so that the discussion between the customer and the bank is on the customer’s agenda and highlights potential solutions that the customer can then prioritise accordingly and address either at that point in time or later.

22.2 Key risks of cross-selling are that the customer obtains a product they do not need or they feel that they are more likely to obtain one product if they also take another product. Barclays has a number of controls to protect against these risks, including:

(A)staff training;

(B)call listening;

(C)welcome calls (the calling of customers who have recently purchased a product in our branch network);

(D)customer documentation; and

(E)complaints monitoring.

22.3 In addition, Barclays no longer offers any product that is directly linked or attached to the purchase of a credit product. Further, Barclays has removed all sales-linked incentive plans for front line employees in the UK Retail Bank.

23. Please provide details of products you currently commonly bundle together and whether or not you explicitly charge for that bundle

23.1 For the purpose of answering this question we have used the definition of a bundle as an offering that has more than one product within its design where the customer must purchase the whole offering with no reduction in the cost even if they cannot use or do not want one or more of the product components.

23.2 We have identified two different product groupings which the Commission may regard as “bundled”. First, the Graduates Additions Account is a current account which, for a fixed monthly fee, also includes ancillary insurance.

23.3 Second, the Barclays Features Store is an interactive hub, launched across all customer channels in 2012, that allows customers to customise their banking facilities by selecting from a range of both free and paid-for components, depending on their personal needs and preferences.

23.4 There are a limited number of other products which have additional components for which there is no additional charge.

24. Please explain the advantages of bundling and risks arising from bundling from both the bank’s standpoint and the customer’s. Describe how you mitigate against any risks arising from bundling

24.1 Products of this nature can provide customers with the convenience of accessing a number of components from a single provider at a lower cost.

24.2 There are three primary considerations in terms of ensuring these products hold enduring value for the customer. First, the product continues to meet the needs of the customer over time. Secondly, the customer remains eligible for the product. Thirdly, the customer continues to understand the benefits of the product.

24.3 To take the example of the Features Store, every new Feature is developed using customer research to ensure maximum relevance and appeal to customers around a specific need. All Features are monitored constantly in terms of both usage and cancellations as a means of assessing the ongoing value.

24.4 Further, to ensure the customer continues to realise the value of the products and services they are paying for, we provide a range of awareness and reminder measures. Customers are sent an annual summary statement, which summarises the benefits/features on their account and how to access them. As part of customer’s annual summary statement, eligibility criteria for each product are also clearly disclosed.

25. Please specify whether you have replaced PPI with another product or products. If you no longer sell PPI type products please confirm how you help consumers insure against the risks of accident and/or sickness and/or unemployment PPI was originally designed to cover

25.1 We no longer sell PPI-type products. We no longer offer assistance of this type to customers.

25.2 Following the withdrawal of PPI, Barclays has not introduced any other product which is specifically linked to covering the cost of debt payments. Barclays did introduce an insurance policy to provide customers with an income benefit (unrelated to lending) in the event of accident, sickness or unemployment but has recently withdrawn this product. Barclays continues to provide a wide range of insurance and protection solutions for customers, including life assurance (to cover mortgage or other needs), critical illness, personal accident cover as well as broader insurance such as home and travel.

26. If you have replaced PPI, please specify what replacement products you have put in place, how they work and all key decisions in relation to them that were made by senior level product development of product approval committees, senior risk or compliance committees, Senior Executive committees, Board committees and the main Board

26.1 We no longer sell any PPI-type products.

14 January 2013

APPENDIX 1

TIMELINE OF KEY EVENTS

Date	Event
Early 1980s	—	Barclays begins offering PPI with certain products.
Pre-1997	—	Barclays PPI was underwritten by Consolidated Financial Insurance Group.
1997–98	—	BID established and majority of new PPI policies underwritten by BID. All existing CFIG policies were migrated across to BID.
2000	—	Woolwich/Barclays merger, including acquisition of FirstPlus.
September 2001	—	BID commences underwriting Woolwich PPI policies
November 2001	—	Barclays become signatory of General Insurance Standards Council (GISC).
2002	—	General Insurance Standards Council code established.
	—	GISC adopted by Barclays and sales standards put in place in channels.
2004	—	Barclays set up group-wide N(M&GI) programme to develop infrastructure and processes to implement FSA regulations for mortgages and general insurance (Mortgage Conduct of Business and Insurance Conduct of Business).
January 2005	—	ICOB introduced.
	—	BID commences underwriting FirstPlus policies
September 2005	—	Citizen’s Advice Bureau issued a super complaint to the Office of Fair Trading (OFT) regarding the product and sales process of PPI.
Q3 2005	—	PPI Overview Committee established as joint Barclaycard and UK Retail Bank senior governance forum.
November 2005	—	Enhanced Demands and Needs process based on 10 months’ empirical data resulting in more relevant recommendations.
	—	1st Thematic PPI review conducted by FSA and Dear CEO letter issued on 4 November.
2005–06	—	Ongoing reviews and enhancements of all scripts and sales processes.
January to February 2006	—	Agreed control framework with the FSA.
	—	Barclays established the 5 Pillars Policy.
	—	Enhanced Terms and Conditions were introduced to cover non-working customers for accident and sickness benefit. These were communicated to all existing customers.
February 2006	—	Enhanced product Terms and Conditions (revised terms & conditions to improve pre-existing conditions, exclusion and cover terms)/revised statement of demands and needs/Q&A introduced.
	—	Introduction of decision engine 3.
April 2006	—	PPI sales frequency of observations increased.
July 2006	—	PPI Control Dashboard introduced.
August 2006	—	Remediation activity to send out statement of Demands and Needs.
September 2006	—	PPI Supervisory Committee established as cross divisional executive committee. This was the executive decision forum for all product, risk and regulatory issues.
October 2006	—	Improvements to controls between Q3/2006 and Q2/2007 including no sales where do not recommend decision generated.
	—	FSA second thematic review (optionality, price, eligibility, exclusions and limitations)
January 2007	—	Pilot of Plan B (tailored PPI) in Barclaycard through outbound telemarketing campaign.
Q1 2007	—	The tailored credit card PPI Plan B decision tree was introduced.
March 2007	—	Pilot of Plan B launched in Barclaycard telephony based on demands and needs process.
May 2007	—	Cross Divisional Product Oversight Committee (CDPOC) established as the executive board to replace Supervisory Committee.
	—	PPI Overview Committee becomes PPI Policy Board for monthly governance reporting into CDPOC.
	—	PPI Programme Board takes on monthly oversight and control of PPI project developments and programme delivery.
August 2007	—	Project Hugo Remediation project started, covering re-scoring of demands and needs questions and answers in line with the new decision engine including a review of PPI sales with a do not recommend decision.
September 2007	—	Plan B fully launched in Barclaycard. Plan B allowed customers (and Barclays to recommend through the decision engine) a combination of the insurance covers that best fitted the customers’ needs (Plan B provided the customer with 7 different possible cover combinations). Each cover was priced separately.
October 2007	—	New policy format, Plain English version and Tailored Policy Schedule/Letter.
	—	Changes to Terms and Conditions.
Q3/Q4 2007	—	Tailored Barclayloan PPI piloted and launched in UK Retail Bank telephony.
January 2008	—	ICOBS introduced with 6 month implementation period.
February 2008	—	Project Hugo—comprehensive review of all products and processes completed. 90,000 customers contacted.
April 2008	—	Decision engine 4 for tailored Barclayloan PPI introduced into the network in April 2008.
May 2008	—	Decision engine 4 for tailored mortgage PPI introduced into network and BDM
June 2008	—	Barclays implements ICOBS changes on suitability, statement of price and oral disclosure.
	—	Graduate, Resolve, Select and Speciality PPI withdrawn.
June 2008	–	Notification to FSA of FirstPlus’s intention to cease new lending.
July 2008	—	Plan B launch on BAID system for branch sales.
August 2008	—	FOS referral to FSA on Issues of Wider Implications regarding PPI.
	—	Barclays introduced a questionnaire to be used by customers when raising complaints on PPI.
	—	FirstPlus stopped selling single premium PPI.
September 2008	—	FSA (third) thematic update (including mystery shopping).
October 2008	—	FirstPlus ceases second charge mortgages.
	—	Completion of tailored PPI products launch (unsecured loans November 2007 to April 2008; Mortgages May 2008; and credit cards and secured loans July 2008).
December 2008	—	Firms requested to withdraw the sale of single premium PPI by the end of January 2009.
	—	Industry agreement to work on a Statement of Principles.
January 2009	—	Barclays withdrew single premium PPI on 31 January 2009.
	—	Competition Commission issued Final Report into PPI.
February 2009	—	FSA clarify ICOBS after Competition Commission final report.
	—	FSA request a back book review of branch sales of Single Premium PPI for an 18 month period (Project Valentine invoked).
	—	CDPOC closed.
Q1 & Q2 2009	—	Decision engine 5 for regular premium Barclayloan PPI in telephony introduced.
April 2009	—	Plan B removed from Barclaycard telephony.
May 2009	—	Plan B removed from internet for new customers.
June to September 2009	—	FSA issued Consultation Paper 09/23 in September 2009.
March 2010	—	FSA issued CP 10/06.
August 2010	—	Barclays stopped selling any PPI.
August 2010	—	FSA issued Policy Statement on Assessment and Redress of PPI complaints (PS10/12).
Q4 2010	—	BBA launches Judicial Review (JR) against FSA and FOS regarding PS10/12 and approach to PPI mis-selling.
April 2011	—	High Court dismisses the JR.
June 2011	—	Barclays establishes Symphony Programme to manage PPI mis-selling complaints and refunds processes.

APPENDIX 2

KEY PRODUCT DEVELOPMENTS AND CHANGES TO SALES PROCESSES

Period	Event
Pre-1998	—	Prior to 1994, PPI cover for Barclayloan was provided for Life, Accident and Sickness. For Barclaycard, PPI cover was provided in the event of Disability or Death.
	—	Following an Office of Fair Trading Directive which took effect from 31 March 1994 and earlier communication from the DTI, the selling of PPI through Negative Optionality (PPI would be provided unless the customer ticked a box on the credit application form saying PPI was not required) was changed to Positive Optionality (tick the applicable box if the customer wants PPI).
	—	In around 1994–95 PPI cover (for the main products Barclayloan and Barclaycard) was extended to include involuntary unemployment, a minimum condition of 16 hours work a week and self-employed persons became eligible for PPI.
1998–2000	—	With the transfer to BID in 1998, Barclays introduced changes to the PPI products such as the inclusion of critical illness/permanent and total disability cover in 1998. BID also introduced personalised Policy Certificates and a new claims procedure.
	—	The introduction of a “step-down” Barclaycard credit card PPI product (called Payment Cover) in 2000 whereby the customer received a reduced benefit for a reduced premium.
	—	Introduction of a GISC Compliant Process Form for PPI sales in 2002.
1998–2004	—	The removal of the then industry-standard exclusion of part-time workers from PPI cover in 2001.
2005–06	—	The introduction of a voluntary injury management programme for claimants who have suffered musculoskeletal problems to facilitate recovery in 2005.
	—	The amendment of mortgage PPI product terms from a 30 day excess/12 month maximum benefit to a 60 day excess/24 month maximum benefit.
	—	In January 2005, the FSA assumed statutory responsibility for insurance mediation and ICOB became effective. This led to:
		—	Questions relating to customer demands and needs in relation to eligibility and suitability were introduced for the sale of PPI through Barclays automated decision engines (single premium Loans, regular premium cards, overdrafts and Mortgages).
		—	PPI policies sold with Single Premium Loans being bespoke to the age of the customer. For customers in paid work for more than 1 hour per week (at time of claim) and aged between 18 and 65, the following cover was made available:
			—	Life
			—	Involuntary unemployment
			—	Accident
			—	Critical Illness
			—	Sickness
			—	Permanent Total Disability
		For customers aged between 65 and 70
			—	Life
			—	Critical illness
			—	Hospitalisation
	—	November 2005 saw further guidance from the FSA for checking PPI eligibility, as well as letters addressed to the Chief Executive of Barclays with the findings of FSA’s Thematic reviews. This led to an enhanced scoring approach with more specific and targeted recommendations.
	—	On 20 February 2006, revised terms and conditions were sent out to all customers with live policies at that date. This incorporated changes to the standard terms and conditions across the entire Barclays PPI product range in order to make the product more inclusive and consistent across the product range. Examples included ensuring greater suitability and continued eligibility for all customers beyond the age of 65; and making other benefits such as Accident, Sickness and Hospitalisation available to customers not working at the date of the claim subject to maximum limits in place.
	—	Following on from the above communication between January and May 2006 a new control framework, including the 5 Pillars Policy was agreed with the FSA.
	—	Additional sales enhancements were rolled out in 2006 known as Consistency & Control.
	—	A revised Statement of Demands and Needs Q & A document for sending out to customers eligible for remediation in February 2006 was agreed, and an increase occurred in the frequency of internal regulatory compliance monitoring of PPI sales in April 2006.
	—	Updating PPI literature in February 2006 to reflect the new PPI terms and conditions and including disclosure of non pro-rata refund tables in Policy Summaries.
	—	Project Hugo: a backbook remediation action to ensure that customers purchasing PPI products since 14 January 2005 had been treated fairly as a result of the changes to the decision engine in November 2005 (for branch sales) and October 2006 (for Barclaycard) and where the initial engine did not preclude sales following a do not recommend.
	—	The introduction of tiered PPI cover for Personal Loans from Barclaycard in 2006.
2007	—	An increase in the age limit of personal overdraft PPI from 65 to 70 in July 2007 in order to bring it into line with Barclays other PPI products.
	—	The introduction in UK Retail Bank of a tailored PPI product in Q4/2007 which offered customers a choice of protection levels, tailored to their situation. The tailored PPI product was launched in stages varying by PPI product and sales channel during 2007 and 2008.
2008	—	Barclays introduced Fair and Square second charge mortgages, together with a regular premium PPI product, in January 2008.
	—	Tailored Product for FirstPlus and Fair & Square secured loans were introduced in July 2008.
	—	Graduate, Resolve, Select and Speciality loan PPI products were withdrawn in June 2008 following a review and consequent systems rationalisation as a result of ICOBS implementation.
	—	FirstPlus stopped selling single premium PPI in August 2008.
2009	—	Single premium PPI was withdrawn by 31 January 2009 as requested by the FSA.
	—	Introduction of regular premium Barclayloan PPI (Project Horizon) as part of the PPI Strategic programme.
June 2009	—	Sales of all Barclaycard PPI ceased.
August 2010	—	Sales of regular premium PPI on loans ceased.

APPENDIX 3

ORGANOGRAMS

APPENDIX 4

FINANCIAL INFORMATION (NOT PUBLISHED)

APPENDIX 5

PPI MIS-SELLING ISSUES

Date Discovered	PPI Mis-selling Issue	Control Function Involved	Remedial action Taken
August 2003	Compliance Monitoring undertook a review of 22 sales and identified eligibility for PPI was rarely discussed with FirstPlus customers and exclusions were not disclosed in some instances.	FirstPlus Regulatory Compliance Monitoring	Failing highlighted in report to management for feedback to supervisors and agents.
2004	A review by FirstPlus identified shortcomings in relation to not providing separate details of the PPI cost (8 examples), not discussing the PPI exclusions with the primary applicant (2 examples), and not confirming nationality or residence (3 examples).	FirstPlus Regulatory Compliance	Failings highlighted to Sales Management for feedback to individual agents.
April 2005	FirstPlus acknowledge that they have not been providing Statements of Price.	FirstPlus Regulatory Compliance	Statements of Price issued from end of May 2005.
Feb/March 2006	Monitoring of FirstPlus sales calls indentified shortcomings in price disclosure. This was also raised by further internal monitoring in Autumn 2006, and by the FSA in November 2006 and January 2007, and recurred through further internal monitoring in June/July 2008.	FirstPlus Regulatory Compliance	Scripts amended in November 2006 to include full price disclosure & to meet ICOB requirement. Any failure to give full price disclosure thereafter would have been dealt with on an agent- by- agent basis, and dealt with in accordance with the Training & Competence scheme.
June and September 2006	The review of 100 Barclayloan sales calls in June 2006 identified shortcomings in relation to price disclosure and suitability. Further sampling in September showed improved results.	UK Retail Bank Regulatory Compliance Monitoring team	Feedback was provided to the sales team. Further testing showed reduction of the fail rate to 12%. Additional feedback was provided and a 90% pass rate was targeted.
Autumn 2006	A review was undertaken in response to a whistleblowing complaint about FirstPlus. That review concluded that there was a highly incentive-driven culture within FirstPlus, and as a result changes were made, including to the incentive structure.	Group Regulatory Compliance & Barclaycard Legal	FSA carried out supervisory visit. Remediation included sales incentives being changed and sales processes enhanced. These remediation steps were shared with the FSA.
Q4 2006	Project Hugo identified various issues, discussed in response to Question 10 above. These included: decision engine re- scoring; sales to customers classed ‘Do Not Recommend’; and missing demands and needs statements.	UK Retail Bank and Barclaycard Regulatory Compliance	Affected customers contacted and offered refunds; revised policy terms; disclosures made.
October 2007	Various reviews were undertaken in 2007 (covering Manchester, Liverpool, Coventry and Sunderland contact centres) that showed some shortcomings in relation to price and product disclosure.	UK Retail Bank Regulatory Compliance Monitoring team	Failed cases reviewed and remediated where appropriate. Product disclosure fully covered during adviser induction. Root cause reasons for different failure rates in contact centres investigated and addressed.
Late 2007/2008	Open consultation with the FSA identified a need to enquire about a customer’s propensity to refinance (which Barclays, and, as far as we are aware, the industry, had not done historically).	UK Retail Bank and FirstPlus Regulatory Compliance	A question dealing with this point was added to the decision engine in November 2007.
Q1 2008	Dashboards provided to the Sales Quality Board or equivalent showed evidence of poor quality advice in relation to UK Retail Bank and Barclaycard PPI sales, some of which were later confirmed to be mis-selling.	UK Retail Bank and Barclaycard Conformance Teams	Further training and embedding of new processes and individual cases remediated accordingly.
2008/2009	‘Project Valentine’ was initiated in response to feedback from the FSA following its mystery shopper exercise in 2008. It included a planned customer contact exercise to assess adequacy of post-2006 sales. This is described more fully above.	UK Retail Bank Legal & Regulatory Compliance	Pilot customer contact exercise was planned but put on hold when the Judicial Review proceedings commenced.
February 2008	A review was undertaken in response to a whistleblowing complaint to the FSA about FirstPlus. That review concluded that the allegations were not substantiated.	Barclays Internal Audit	None required.
August 2008	A review of 20 sales calls found some calls did not meet sales standards and in particular customers may have been led to believe that PPI was a standard benefit rather than a separate product. Issue was primarily with non- adherence to sales script.	Barclaycard Regulatory Compliance Monitoring team	Remediation undertaken with customers and feedback/training provided to sales employees.
December 2008	A review was commissioned following the FSA’s ARROW visit at the end of 2008. The Barclaycard Legal and Regulatory Compliance review found a high fail rate in parts of the sales process, in relation to disclosure of matters such as price disclosure (total cost should have been disclosed in addition to monthly cost), cashback (the cashback feature whereby the single premium amount could be claimed back if the policy ran its full term was at times misrepresented) and costs (separate cost of PPI should have been disclosed at an appropriate time in the sales call).	Barclaycard Legal & Regulatory Compliance	Proactive customer contact in progress under Project Symphony.
April 2009	A review identified a failure to inform customers that PPI on overdrafts was optional in 7 out of 36 cases.	UK Retail Bank Regulatory Compliance Monitoring	Immediate remedial action on customer accounts. Additional training of employees.
2011	Root cause analysis work established that there had not been adequate assessment of customers’ propensity to refinance.	UK Retail Bank Regulatory Compliance	As a result of RCA findings in 2011, the decision was made under Project Symphony governance to contact customers who may have been impacted.

APPENDIX 6

TIMELINE OF REGULATORY ENGAGEMENT AND BARCLAYS RESPONSE

Regulatory event	External Activity (FSA, FOS, OFT)		Barclays Analysis/ Response		Business Action
January 2005	—	ICOB rules introduced representing a significant change to the applicable regulatory regime.	—	Gap analysis of rules.	—	The response by Barclays, in conjunction with BID, to the FSA regulations in the area of PPI sales was to implement a systems-based ‘decision engine’ in order to ensure consistent assessments of customer demands and needs across all contact centres and branches.
					—	The PPI decision tree was based on the answers of the demands and needs questions and allocated a points score and then a recommendation (recommend/recommend with caution/do not recommend) was produced by the system based in the final points score achieved
					—	PPI sales observations process put in place for monitoring.
					—	Introduction of decision engine 1.
November 2005–December 2005	—	FSA’s first thematic report: ‘The sale of payment protection insurance—results of thematic work’.	—	Gap analysis and assurance work undertaken.	—	Phase I enhanced scoring approach and more relevant recommendations introduced.
	—	FSA issue PPI guidance on eligibility checking.	—	Barclays response to the Dear CEO letter was sent by John Varley on 16 December.	—	Introduction of decision engine 2.
	—	Dear CEO letter issued on 4 November following first thematic review requiring Barclays to conduct a review of the applicability of issues highlighted in the FSA report:	—	April 2006: Briefed FSA on outline plans relating to proposed tailored product, introduction of 5 Pillars and Terms & Conditions changes.	—	Barclays establishes the “5 Pillars” standards.
	—	risk of inappropriate sales;			—	February 2006—Phase II enhanced product Terms & Conditions (revised terms & conditions to improve pre- existing conditions, exclusions and cover terms)/revised statement of demands and needs/Q&A introduced.
	—	non-advised sales;
	—	assessment of customers needs—advised sales;
	—	content of the demands and needs statement—advised sales;
	—	inducements and sales targets;			—	Ongoing reviews and enhancements of all scripts and sales processes
	—	product disclosure;
	—	price disclosure; and
	—	compliance monitoring.
October 2006	—	FSA’s second thematic report: ‘The Sale of Payment Protection Insurance—results of follow-up thematic work’.	—	A number of PPI calls submitted to the FSA (as part of a Group wide FSA review).	—	Improvements to controls between Q3/2006 and Q2/2007.
	—	Barclays receives FSA letter setting out 6 actions on MI, monitoring, price, governance and T&C’s.			—	Compliance monitoring undertaken.
					—	The calls were initially reviewed by Regulatory Compliance.
2006	—	Whistleblower letter sent to the FSA in July 2006. FSA referred the matter to Barclays Group Compliance	—	Barclays Group Compliance and Barclaycard Legal conducted an investigation (Project Rummage)	—	There were issues requiring remediation that were completed during 2007 and issues assured by BIA in Q1 2008.
	—	FSA supervisory visit to FirstPlus.
September 2007	—	FSA’s third thematic report: ‘The Sale Of Payment Protection Insurance—Thematic Update.	—	Assurance testing.	—	2007: Introduction of tailored PPI in UK Retail Bank.
					—	October 2007:
					—	New policy format, Plain English version and Tailored Policy Schedule/Letter.
					—	Subsequent claims within 3 months (reduce from 6 for de-facto rating) and exclude conditions that were present at the time of the previous claim.
					—	If 2 or more jobs, will pay benefit on a pro-rata basis relative to the income lost.
November 2007	—	FSA’s thematic reviews	—	Details of tailored PPI shared with FSA	—	Plan B was developed and launched in order to allow customers added flexibility in tailoring their cover choices for a PPI product. It was also thought that the move to Plan B better allowed Barclaycard to meet FSA expectations in providing/recommending products that fit the needs of the Customer.
					—	Plan B was initially tested as Project Amethyst (around Q2 2007) and rolled out via telephony and internet in late 2007.
					—	Plan B was introduced into offline card recruitment channels and in web Brochureware pages on non advised basis (Plan B replaced the previous Life Accident Sickness Involuntary Unemployment (LASIU) proposition in all channels where launched)
					—	Introduction of decision engine.
January 2008	—	ICOBS rulebook introduced (with 6 month transitional period for firms to comply).	—	Gap analysis of substantially new rules.	—	June 2008: Barclays implements ICOBS changes on suitability, statement of price and oral disclosure.
			—	Assurance testing.	—	Decision engine 4 for tailored PPI introduced into the network in April 2008.
February 2008	—	Whistleblowing complaint to the FSA about FirstPlus	—	Barclays Internal Audit Review which concluded that the allegations were not substantiated	—	Not required
March 2008	—	Bi-lateral discussions with FOS covering:	—	Following discussions two letters sent to FOS (and replies received) detailing issues discussed in meeting.	—	Review of issues.
	—	mismatch of term of loan and term of PPI and consequences;			—	April 2008: PPI complaint decision tree shared with FOS.
	—	transfer of risk;
	—	cost of cover;
	—	affordability;
	—	oral disclosure; and
	—	impact of financing.
August 2008	—	FOS Wider Implications Letter submitted to FSA and industry regarding PPI.	—	Monthly meetings commence with Tony Boorman (FOS) and senior management at Barclays.
September 2008	—	FSA press release on thematic update, mystery shopping and next steps.	—	Internal review and discussions with FSA	—	Project Valentine initiated in early 2009 but subsequently put on hold pending the outcome of the Judicial Review.
December 2008	—	Firms requested by FSA to withdraw the sale of single premium PPI by the end of January 2009.	—	Industry agreement to work on a Statement of Principles with FSA.	—	Withdrawal of single premium PPI in January 2009.
			—	January 2009: Bi-lateral discussion continues with FSA regarding the single premium PPI withdrawal.	—	Barclaycard did not sell single premium PPI. It stopped selling regular premium PPI in May/June 2009.
			—	January 2009: Barclays and other providers stop selling single premium PPI.
December 2008	—	Letter received from FOS requesting Barclaycard to review the backlog of PPI complaint cases.	—	Barclaycard agreed to conduct a further review of the PPI complaints backlog currently with FOS. Where Barclaycard identified cases requiring further representation or settlement, it informed FOS once the review was complete.	—	Review of PPI complaints completed.
January–February 2009	—	January 2009: Competition Commission issue Final Report into PPI.			—	Q1/Q2 2009: Decision engine 5 for regular premium in telephony introduced.
	—	February 2009: FSA clarify ICOBS after Competition Commission final report.
February 2009	—	FSA requests a back book review of branch sales of single premium PPI for an 18 month period.			—	Project Valentine commenced as a result but subsequently put on hold pending the Judicial Review.
September 2009	—	FSA issue a consultation paper on PPI complaint handling (CP09/23).	Gap analysis.
August 2010	—	FSA publishes final handbook provisions PS10/12.			—	Judicial Review application
October 2010	—	BBA launches Judicial Review against FSA and FOS regarding PS10/12.
April 2011	—	High Court dismisses the Judicial Review.			—	June 2011: Barclays establishes Symphony Programme to manage PPI mis-sell complaints and refunds processes.
					—	Ongoing meetings with FSA.

GLOSSARY OF TERMS

Term	Description
4 Cs	Colleagues, Customers, Company and Citizenship
5 Pillars Policy	Initiative implemented in 2006 comprising a set of guiding principles in respect of Barclays’ PPI product offering
ABI	Association of British Insurers
ARROW	Advanced Risk Response Operating Framework, the FSA process for assessing and dealing with risk
BAD	Barclays Assurance (Dublin) Limited, an Irish company that underwrote Barclays PPI policies
BAID	Barclays Automated Instant Decisioning, a computer programme which succeeded the Decision Engine
Barclays Feature Store	An interactive hub, launched in 2012, that allows customers to customise their banking relationship by selecting from a range of both free and paid-for features to accompany their basic banking services, depending on their personal needs and preferences
BAU monitoring	Business as usual monitoring by branch managers and supervisors
BIA	Barclays Internal Audit
BID	Barclays Insurance (Dublin) Limited, an Irish company (regulated by the Central Bank of Ireland) that underwrote Barclays PPI policies
BUCO	Business Unit Control Officer
Cassidy Davis	Cassidy Davis Underwriting Agencies Ltd, underwriters of Firstplus PPI policies between March 1999 and January 2005; replaced by BID
CDD	Customer Discussion Document
CDPOC	Cross-Divisional Product Oversight Committee, responsible (inter alia) for PPI-related issues of cross-divisional importance; an escalation point for the PPI Policy Board
CFI/CFIG	Consolidated Financial Insurance Group, underwriters of Barclays PPI policies pre-1997
Decision Engine	A semi-automated computer programme designed to assist Barclays employees in deciding whether to offer a customer a PPI
FirstPlus	Barclays’ consumer lending business
GISC	General Insurance Standards Council
ICOB	Insurance: Conduct of Business handbook, effective January 2005
ICOBS	Insurance: Conduct of Business Sourcebook, effective from January 2008 (with a transitional period)
LASIU	Life Accident Sickness and Involuntary Unemployment (acronym used to describe the cover provided by PPI policies prior to the introduction of Tailored PPI)
N(M&GI) Programme	Mortgages and General Insurance Programme, set up in 2005 for the purpose of implementing the FSA’s MCOB and ICOB regimes
Penetration Rate	The proportion of all lending which included PPI
Plan B	A PPI product which replaced LASIU policies in each of the channels where it was sold
PPI Control Dashboard	A report containing details of PPI sales which was made available to PPI governance committees from July 2006
PPI Overview Committee	A governance body established in 2005 for the purpose of reviewing and challenging all aspects of the introduction, underwriting, marketing and administration of PPI products, succeeded by the PPI Policy Board
PPI Policy Board	A governance body established in 2007 (as successor to the PPI Overview Committee) to monitor compliance with the 5 Pillars Policy and to approve actions arising from any analysis undertaken on any PPI regulatory finding or publication; it reported to the PPI Supervisory Committee and later CDPOC
PPI Programme	A governance body established to develop and implement PPI products in response to risk and issues arising out of (inter alia) regulatory intervention and/or internal audit and regulatory compliance findings; it was overseen by the PPI Programme Steering Committee
PPI Supervisory Committee	A cross-divisional executive committee, providing the executive a decision forum for all PPI-related product, risk and regulatory issues; it later became CDPOC
Project Amethyst	A project set up to test the “Plan B” product
Project Hugo	A backbook remediation initiative, overseen by the Project Hugo Project Board and commenced in Q4 2006 to review the impact of the Decision Engine and ensure customers had been treated fairly as a result of changes to the engine
Project Symphony	Programme established to manage PPI mis-selling complaints and refund processes
Project Valentine	A back-book remediation exercise introduced in response to feedback from the FSA following its mystery shopping exercise in 2008
RCA	Root Cause Analysis
Salz Review	An independent review of Barclays business practices led by Anthony Salz, reporting to Deputy Chairman Sir Michael Rake and a sub-committee of the Barclays Board; the Review is expected to publish its Report in the Spring of 2013
T & C Scheme	Training & Competence Scheme, introduced in January 2005, in part as a consequence of the introduction of the FSA’s ICOB regime
Tactical Phase II	Initiative carried out in February 2006 to enhance the terms and conditions for PPI products
Tailored PPI	A PPI product which offers customers a choice of protection levels, tailored to their situation
TCF Oversight Forum	Forum responsible for reviewing the impact of products and sales processes on customers with reference to the Barclays Treating Customers Fairly Guiding Principles