Barclays PLC (LSE:BARC) is working with Manolete Partners PLC (AIM:MANO) in a pilot scheme to try and claw back money from 100 defaulters out of the near-£11bn of government-backed loans it made during the pandemic.
Under the Covid bounceback scheme, lenders provided loans of up to £50,000 to small companies, guaranteed by the government and with lower levels of eligibility checks.
Out of an estimated £46bn doled out, Barclays was the main lender, providing around £10.8bn.
In November, data from the Department for Business, Energy and Industry (BEIS) revealed that Lloyds Banking Group PLC (LSE:LLOY) had been worst hit fraud, with over £300mln worth of suspected recovery loans.
Around 3.6% of Lloyds’ bounce-back loans were earmarked as “under suspicion", compared to 2.4% for Barclays, 1.7% for Natwest and 1.3% for HSBC.
The public purse is reportedly facing losses of more than £1.1bn from misappropriated loans, with many fraudsters thought to have exploited the minimal eligibility checks.
Working with Manolete, which describes itself as the leading UK-listed insolvency litigation financing company, the pilot scheme is to run until June 2023, supervised by the British Business Bank (BBB), the FT reported.
Manolete told the newspaper that some directors did not appear to have spent the bounceback loan money and that many directors faced with the threat of personal legal proceedings usually opted to settle rather than go to court.
Barclays told media: “We utilise debt collection agencies and use our rights as lender to take civil enforcement action. Where appropriate, we inform law enforcement agencies about borrowers where we suspect criminal wrongdoing.”
With the National Investigation Service having recovered £3.8mln in 2021-22, BEIS said the government “is cracking down on fraud in the bounceback loan scheme — working with lenders, law enforcement, and partners across government to recover fraudulently obtained loans”.