Barclaycard is the country’s oldest and most well established credit card. It is estimated that 1 in every 5 credit card in the UK is a Barclaycard. The credit card’s reputation has been tarnish in recent years, along with the rest of the credit card industry, following the emergence of the payment protection insurance scandal.
The issues regarding PPI were uncovered by The Financial Services Authority and The Office of Fair Trading during investigations in 2006. They found significant and widespread problems with the way payment protection cover was being sold. Following the investigations there was a significant rise in the amount of unhappy customers applying to claim back PPI.
Barclaycard is owned by the Barclay Group which is estimated to have sold between 1.6-2.4 million payment protection insurance policies and recently allocated £1 billion to compensating customers who were mis-sold the cover. As well as credit card PPI Barclays also sold loan protection insurance and mortgage payment protection insurance cover.
Barclaycard PPI is calculated on a monthly basis dependant on the customer’s outstanding balance. It differs from loan PPI in this way because it varies in cost from month to month. If a customer’s balance is at nil they won’t pay anything. Charges for credit card PPI vary from lender to lender, but are typically around 79p per £100 outstanding. So, on a balance of £5,000 a customer may pay around £39.50 per month. If the balance remained constant for a year that would equate to £474.00 for twelve months of cover.
Because Barclaycard PPI and other credit card PPI is charged on a monthly basis and can vary considerably customers often don’t appreciate how expensive the cover can be. The other real issue with credit card PPI is that it has a low rate of payouts. A competition Commission survey in 2008 found that just 11% of customers who tried and use their credit card PPI policy were successful in doing so.
A significant reason why the rate of payouts for credit card PPI was so low is likely to be connected to the fact the policies have quite a high rate of exemptions – that is things that it does not cover. This can vary from whole groups of people – for example people over 65 and the self-employed - to specific medical conditions – for example back pain or depression.
Many people are, undoubtedly, left feeling frustrated after having a claim for help from their credit card PPI policy rejected, but if your lender failed to fully explain the terms of your policy to you, you may be eligible to make a claim for mis-selling.
Similarly, if your lender failed to explain the full costs of the cover to you or gave you incorrect information (E.g. that the cover was compulsory or would improve your chances of being given the credit card) your policy may be considered to be mis-sold.
If you believe you may have been mis-sold a Barclaycard PPI policy or you’d like more information contact our team on 0207 471 2000.
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