Barclays Bank has been ordered by regulators to repay millions of pounds in interest on improperly sold timeshare loans in Malta and faces a further investigation that could force the bank to reimburse debt payments in full, the Financial Times reported on Wednesday.

In a letter to borrowers last week, the UK lender acknowledged it had been told by the Financial Conduct Authority (FCA) to hand back interest already charged on loans issued between April 2014 and April 2016 by timeshare operator, Azure Services.

Barclays must also cancel future interest due on the more than 1,400 loans.

Barclays Partner Finance was the banking partner for Azure Resorts, and underwrote financing agreements sold to holidaymakers.

It is being reported that although Azure Resorts was licensed by the FCA to sell loans, the employees brokering the financing agreements were working for another company, Azure Services, which was not authorised by the FCA until April 25 2016.

The repaid and waved interest amounts to an estimated £26m, about half of the value of the £48m of loans in question, according to Malaga-based law firm, M1 Legal, which represents the borrowers whose cases were reviewed by the FCA.

A spokesman for Barclays said that figure could be “materially overstated”, but declined to provide a more exact estimate. Barclays must also install an “independent assessor” to review whether each of the timeshare loans were affordable.

If not, the bank will be required to cancel the loans and reimburse customers for all payments, including an additional 8 per cent interest, according to the letter to borrowers seen by the Financial Times.