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Barclays to facilitate PPI refunds

Tens of thousands of customers mis-sold Payment Protection Insurance (PPI) look set for compensation from major bank Barclays.

PPI was sold to cover the cost of repaying loans, credit card debts and overdrafts if people fell sick or lost their job. And this week Barclays became the first establishment embroiled in the PPI scandal to offer "no quibble" refunds, averaging £2,500 each, to customers previously mis-sold PPI.

Barclays, which faces a £1bn bill, has revealed that customers who lodged a complaint before April 20 will be automatically reimbursed. They will receive the full value of premiums plus 8% interest by August 31.

According to experts, the pressure is now on those other institutions to follow suit.

"Banks have a lot to do to rebuild their reputation after over a decade of mis-selling PPI and then mishandling complaints," said Peter Vicary-Smith, Chief Executive of watchdog Which?

"It's fantastic to see Barclays stepping up in this way, acknowledging their mistakes and refunding customers, no questions asked. Hopefully it will have a domino effect."

Those still waiting on PPI compensation will welcome news that the Financial Services Authority has now set a 16-week deadline for Lloyds Banking Group, Royal Bank of Scotland - which includes NatWest - and Barclays to deal with the backlog of PPI complaints.

Lloyds has already set aside £3.2billion to cover payouts for PPI.