A US firm which acquired a credit card business from Barclays is to sue the bank via the High Court for more than £1 billion in damages, in a case which concerns mis-selling of payment protection insurance (PPI).
The case has been brought by CCUK Finance, formerly known as CompuCredit. CCUK, the British subsidiary of a US firm that is now known as Atlanticus, bought Monument, a sub-prime credit card business, from the UK banking giant in 2007.
The deal included an indemnity clause regarding compensation for PPI mis-sold by Monument. Barclays has paid out some compensation for Monument’s PPI mis-selling since the completion of the transaction.
CCUK is now seeking £1 billion in compensation from Barclays, a figure which includes an allowance for interest, plus an additional £60 million for alleged fraudulent representation.
In a statement, Barclays rejected any suggestions of wrongdoing on its part, saying:
“Over the last 10 years we have operated within the parameters of the deal agreed with CompuCredit and believe their recent claims against us are baseless and without merit. We will be vigorously defending our position.”
Only two years after the £390 million transaction had been completed, CCUK decided to close down the Monument business.
Barclays continues to receive tens of thousands of PPI complaints every month, and is likely to continue having to deal with large volumes of complaints right up until August 2019, when a deadline for making a PPI claim comes into force. The bank has set aside £8.4 billion to pay compensation to customers who were mis-sold PPI, and the UK financial services sector as a whole has paid out around £35 billion in compensation to date.
Ahead of the deadline, it is still very much possible to make a PPI mis-selling claim, even if the insurance was sold a decade or more ago. PPI is quite simply the most widely mis-sold financial product ever. It is designed to protect loan repayments should a borrower suffer accident, sickness or unemployment, but around seven million consumers have submitted complaints about the sale of the product, and a significant majority of these have ultimately been successful.
The reasons why PPI may have been mis-sold are varied. Some customers were sold PPI they were unlikely to be able to claim on due to their employment status or medical history. Sometimes PPI was sold without the firm checking that the customer was eligible, or whether they already had adequate insurance. Highly pressurised, target-driven sales cultures were commonplace, and significant numbers of policies were added to customers’ loans without their knowledge or consent.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.