Customers’ credit scores hit by Barclays IT fault

Barclays bank has been accused of damaging the credit records of buy-to-let mortgage borrowers by failing to fix a key software fault customers first reported at least six years ago.

The high street bank has informed one affected customer that it is “unlikely” to resolve the problem before the end of 2024, when it plans to move clients to a new system.

Customer accounts managed with the bank’s Trinity IT system did not accurately record monthly loan repayments, resulting in the bank wrongly flagging customers in arrears and marking down credit records shared with credit agencies.

Borrowers were left unable to secure new loans or move to other lenders, including over the past two years when interest rates have soared. In one case, Barclays mistakenly issued seven monthly defaults on 22 mortgages on a single borrower’s credit file.

Internal emails reviewed by the Financial Times showed Barclays was aware of the software fault as long ago as 2017, but it still refused customers’ requests to switch out of Trinity-based products without paying exit penalties.

In one internal memo from April this year, Barclays staff said this was a “known error” affecting a “majority” of the buy-to-let mortgage holders managed on the Trinity system.

Barclays declined to confirm the number of customers affected. It said no new customers had been put on the system since the end of 2020, but declined to comment on why existing customers had not been switched to other systems while the fault persisted.

The FT interviewed two affected customers who shared their emails, correspondence and the findings of regulator complaints. One customer shared Barclays’ internal emails secured via a subject access request, a legal route to access personal data held by an organisation.

Mick Roberts, a 55-year-old buy-to-let landlord based in Nottingham, said he first became aware of the problem in 2017. At the time, Barclays said the matter had been resolved. However, the issue worsened when he attempted to remortgage three properties held with a different lender two years ago.

In 2021, Roberts was offered a mortgage rate of 1.49 per cent on the three properties only to have a credit check fail. He is now paying more than 9 per cent having been placed on tracker rates.

“I have not slept for three years. I can’t get a credit card, a phone contract. Normally my credit is clean,” Roberts said. He had been reduced to handing out leaflets to passers-by in front of his local Barclays branch decrying the situation. Once, he glued himself to the counter in protest.

Yet the lender continued to tell customers they would need to pay to exit their agreement, despite admitting the errors were its fault.

“Every few months you have to start a new complaint, new investigation, and a good group of [staff] know about the failure,” said Keith Cowan, a 61-year-old business owner based in Newcastle. He bought a property with his wife to rent out, but the debacle forced him to sell to escape further damage to his credit score.

Keith Cowan, a 61-year-old business owner, bought a property with his wife to rent out, but the Barclays software fault forced him to sell to escape further damage to his credit score

Cowan said six defaults since November 2021 resulted in another bank withdrawing “all my credit facilities” despite his credit file being “immaculate” before Barclays flagged supposed arrears.

The Financial Ombudsman has upheld complaints made by Roberts, while public records show it did so for similar complaints made by at least two other customers. In July, it ruled Barclays should pay Roberts £1,300 and the difference between the current market rate and the one he would have been able to access had he not been flagged in arrears. This would come on top of some £1,600 in compensation he had already received.

Earlier this year the ombudsman ruled Cowan, who had also received some redress from the bank, was offered fair compensation, but it accepted Barclays’ actions resulted in a “great deal of stress and inconvenience”.

A separate complaint to the Information Commissioner’s Office by Cowan was upheld in June. It ruled Barclays had breached the “accuracy principle” of general data protection regulations by reporting “inaccurate information to credit reference agencies”.

Internal memos from Barclays dated January 2022 revealed the Financial Conduct Authority, the UK’s financial watchdog, approached the bank for a briefing after the issue was covered in the Guardian two years ago. At the time, the bank told the newspaper it was working “swiftly to review and resolve the situation”.

The FCA said it could not comment on individual companies, but warned that regulated firms must treat customers fairly and “prevent consumer detriment, including to their credit file”.

Barclays said it had apologised to Cowan and his case had been “fully investigated” and all “credit file issues resolved”. However, it has not refunded exit fees.

In Roberts’ case, Barclays said it had provided a “dedicated point of contact” as ordered by the Financial Ombudsman. It declined to comment on why Roberts had been informed his account would not be migrated to a different system until the end of next year.

The bank added: “We take the responsibility of reporting accurate data of customers’ credit reference information extremely seriously and as soon as we are alerted to any inaccuracy we work swiftly to resolve the situation.”

Articles You May Like

Buyers of newly built homes can face a property tax surprise. Here’s why
Is time starting to run out for Benjamin Netanyahu?
Top Wall Street analysts like these 3 stocks for their growth prospects
S&P cuts Dunkirk, New York, GOs 3 notches to BBB-minus, rating then withdrawn
The World Bank and IMF start spring meetings