FCA investigation into Barclays’ collections and recoveries controls at “advanced stage"

A small detail in Barclays’ full results for H1 2020, published on Wednesday, shows that since February 2018, the FCA has been investigating whether the group implemented effective systems and controls with respect to collections and recoveries and whether it paid due consideration to the interests of customers in default and arrears.

When Credit Strategy sought the FCA’s response, the regulator said it would not confirm or deny details on ongoing investigations. Barclays is yet to respond.

Barclays’ results for H1, which were published on July 29 and show the bank has offered 600,000 payment deferrals, do not go into any more detail on the nature of the investigation, but they do shed some light on the current effect of the pandemic on its arrears rates, both on secured and unsecured lending.

The report states that one of the key drivers in the increase in arrears rates across UK cards, UK personal loans and Barclays Partner Finance during H1, was lower collections capacity in the first few weeks of the COVID-19 related lockdown, prior to payment holidays being initiated.

UK cards

The results shows Barclays’ 30 and 90-day arrears rates increased by 0.3% and 0.2% respectively. The majority of the increase was driven in part by a £2.8bn reduction in balances, during H1. A total of 151,000 payment holidays were provided to credit card customers since lockdown.

As at 30 June 2020, the book value of the credit card portfolio where payment holidays have been granted was £664m, representing 4.9% of the portfolio.

UK personal loans
The 30 and 90-day arrears rates for personal loans increased by 0.3% and 0.4% respectively in H1, driven by a 10% reduction in overall balances, coupled with lower collections capacity in late March.

A total 74,000 payment holidays were provided to personal loan customers since lockdown. As at 30 June 2020, the book value of the personal loan portfolio where payment holidays have been granted was £609m, representing 11% of the portfolio.

Barclays Partner Finance

Barclays saw a marginal improvement in the 30-day arrears rate, in Barclays Partner Finance during H1, primarily a result of the sale of the motor financing business, and since the introduction of payment holidays, lower flows into delinquency.

During H1, a total of 13,000 payment holidays were provided to customers in Barclays Partner Finance. At 30 June 2020, the book value of this portfolio where payment holidays have been granted was £43m, representing 1.9% of the portfolio.

Mortgages

Of a total mortgage book of £145bn, Barclays’ 90-day arrears rate, excluding its recovery book, is 0.2% - the same level as a year ago. Its gross charge-off rate (the proportion of mortgages 180 days past due) is 0.5%, down marginally from 0.6% at June 2019.