Barclays Faces £150m Hit for 'Reckless' Qatar Fundraising and Personal Loan Mistake Payouts

Barclays revealed it is contesting a £50m fine related to its 'reckless behaviour' surrounding the way it raised cash from Qatar, in order to avoid a taxpayer bailout, while it also faces a £100m customer payout due to mistakes on personal loan paperwork.

While the Financial Conduct Authority (FCA) and the Serious Fraud Office (SFO) have not made a statement related to the Qatar fundraising investigation, Barclays' spokespeople say the bank is contesting allegations that are contained in a 'formal warning' from the watchdog.

After the onset of the credit crisis, Barclays raised £4.5bn (€5.2bn, $6.9bn) in new shares in June 2008 and then a further £7bn in November that year.

However, the SFO investigation centres around the details of the deal Barclays struck with the sovereign wealth fund, in "an agreement for provision of advisory services" by Qatar to Barclays in the Middle East.

Essentially, it is focusing on whether Barclays lent the sovereign wealth fund money to buy its own shares during the height of the financial crisis.

On 15 August 2012, the Director of the SFO confirmed that the office had formally opened an investigation "into certain commercial arrangements between Barclays Bank and Qatar Holdings in 2008."

Barclays Contests Allegations

The FCA's warning says that when Barclays "acted recklessly", in the way it disclosed the information about the fees, this then led to some governance rules being broken, including the way shares are listed on the stock exchange.

Barclays said in a statement to the press that the existence of the "advisory services agreement" in June 2008 was disclosed, but not the advisory services agreement in October 2008.

"While the warning notices consider that Barclays and Barclays Bank believed at the time that there should be at least some unspecified and undetermined value to be derived from the agreements, they state that the primary purpose of the agreements was not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the capital raisings," said the bank.

Retail Banking: Making More Mistakes

Barclays faces paying customers £100m in refunds, after charging around 300,000 of its personal customers too much interest, following a raft of mistakes it made on the personal loan customers' paperwork.

"Barclays has proactively reviewed information it has historically sent to its customers relating to interest charges where we have found technical documentary errors," said a spokesperson at Barclays.

"As a result Barclays has identified certain issues with the information contained in some statements and arrears notices relating to consumer loan accounts.

"Due to these notification errors, interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned.

"No customer will pay more than they were ever contractually expected to."

Barclays said it would contact all customers affected.

Britain's Worst Bank?

Move Your Money, a campaign to encourage consumers to think carefully about who they bank with, polled 2,063 Britons through YouGov to compile its "switching scorecard", asking a range of questions from perceptions of honesty to what puts people off changing accounts.

Barclays Bank scored only four out of 100 on a scorecard comparing Britain's high street financial institutions to help consumers decide on whether or not to switch account providers, ranking it the country's worst.

One of the chief campaigners from the group said that Barclays has been hit by these two new scandals in 24 hours "just as they started a charm offensive to entice their lost customers back with 7-day switching."

"Barclays lost over half a million current account customers alone in the last year. If they think they can win them back by covering up scandal after scandal with PR spin, then they don't know the British public," says Laura Willoughby MBE, from campaign group moveyourmoney.org.uk.

"They came bottom of the switching scorecard we released yesterday - we had not factored in that it would need to go into negative figures. It shows just how deep the rot within the organisation is; it will take years not weeks to turn a bad bank like Barclays around."

Figures from the FCA, which regulates the banking sector, show Barclays was the most complained about bank in the second half of 2012.

In total Barclays received 414,302 complaints from customers in the latter six months of 2012, thought this was down 6% on the previous half-year.