Barclays will be forced to refund 300,000 customers their interest on personal loans after making mistakes on the paperwork.
The error could cost the bank £100 million. Customers who took out personal loans from October 2008 onwards could be affected and will be contacted in the next month.
Barclays acknowledged the problem in its annual results in February when it reported that retail and business banking income had fallen 4% to £1.086 million 'primarily due to provision taken to remedy historical interest charges incorrectly applied to customers'.
Further details of the mistake were announced yesterday as the bank put out a prospectus as part of a plan to raise £5.8 billion in capital. In it Barclays said it had 'identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts'. It did not provide any more information about the nature of the mistakes.
The bank added: 'Due to these notification errors, interest was not due on certain accounts during the period that Barclays made the mistake.'
Barclays said while no-one has been mis-sold a personal loan 'customers are entitled to have their interest payments returned'.
Barclays' mistake echoes that made by Northern Rock Asset Management last year. It had to repay interest paid by 152,000 borrowers following errors in its paperwork.
The news of the personal loan problems adds to a bad week for Barclays which has announced it is to contest a £50 million regulatory fine. It was fined by the Financial Conduct Authority (FCA) for 'acting recklessly' when it failed to disclose £322 million of fees to Qatari investors when it launched its £5.8 billion rights issue in July.
The regulator found the fees had been paid to gain Qatari investment in the bank rather than to provide advisory services as Barclays has argued.
