Yahoo Finance Barclays slaps spending curbs on customers – no matter how wealthy they are
Barclays customers are having their overdraft limits slashed – regardless of how much money they have and how much they earn.
Customers have told the Telegraph that Barclays wrote to say that their overdraft limit will be cut to ensure they “do not borrow more than is manageable”.
But the customers insist they have substantial savings with Barclays and only use their overdrafts for emergencies, or if a surprise bill drags them over their limit.
Christopher O’Hearn, of Bishop Auckland in County Durham, said Barclays wrote to him saying it was reducing his limit from around £3,000 to £490 – despite him having an above-average household income and a large sum of money sitting in the account.
The letter read: “We regularly review overdraft limits to make sure customers don’t borrow more than is manageable. Based on the income information we have, it looks like your limit might be higher than we’d offer if you applied for an overdraft today.”
Mr O’Hearn said: “We have had the account for nearly 30 years, and for the past year or so, there has been a significant balance in the account.
“The bank told us they were reducing the limit so customers do not borrow more than they can afford. And that if we do not like it, we need to send them statements from other accounts and proof of income.
“We know we are well-off compared to most people, and if we are only good for £490, then God help anyone on an average income.”
It comes after thousands of Barclays customers complained in 2021 that their credit card limits had been slashed by as much as 99pc despite never missing a payment.
In 2020 Barclays was fined £26m after it was found to have mistreated some customers who were in financial difficulties and fell behind on credit card and loan payments between 2014 and 2018.
The financial regulator said at the time the bank had failed to properly contact customers who fell into arrears and had not had appropriate conversations about their individual circumstances.
Another Barclays customer, who had their overdraft cut by £1,000, said: “When you get Barclays staff on the phone they can not give a straight answer. They claim they are protecting customers by massively reducing unused overdraft limits based on income.
“But the limits are based on how much you have dipped into it in the last year. So if you are deep in debt, they will happily keep making money out of you – and if you are not, they are stripping your overdraft away. It stinks, and the regulators need to get involved.”
Barclays says it has been reviewing overdraft limits since 2021 and is only contacting customers if it thinks their overdraft is unaffordable.
Savers have 30 days to appeal an overdraft limit decision. They must call the bank or visit a branch, and then provide detailed documentation on their salaries and savings.
A spokesman for the regulator, the Financial Conduct Authority (FCA), said: “Banks can take commercial decisions on how much they wish to lend, but if they’re considering changing lending limits lenders should consider the circumstances of their customers and communicate with them clearly.”
Barclays said it would review its customer letters, and how it carries out underlying affordability overdraft checks for customers with large deposits.
A spokesman said: “It is important to manage an overdraft like any other debt, and we have a duty of care to try to prevent limits from being more than customers can afford.
“We review all personally arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.
“Where this suggests that a personally arranged overdraft limit may be too high, we will plan to reduce it to a lower limit, taking into account how much of the overdraft has been used over the past 12 months. If the overdraft has not been used for a long time, we may remove it.”
Banking bosses are under pressure amid a wider scandal over “de-banking” after Brexit campaigner Nigel Farage revealed that Coutts – which is owned by NatWest Group – moved to close his account over his political views.
It also comes as NatWest this week granted itself “sweeping new powers” to limit cash deposits and withdrawals for its customers.
Last week, the FCA announced banks will be named and shamed for short-changing savers after finding that less than 30pc of interest rate rises have been passed on to customers.
It is claimed Barclays has also been one of the worst culprits for not passing on rate rises to savers. According to the consumer group Which?, Barclays customers received the lowest returns over the last three years, with savers using the bank’s Everyday Saver account earning an average of 0.1pc between January 2020 and March 2023.
Barclays has also come under fire for closing down hundreds of branches across the country in recent years. By the end of this year, the bank will have shuttered 1,116 branches since 2015, the consumer group said.
