Banking giant Barclays has taken an additional £300 million hit to cover payment protection insurance (PPI) mis-selling claims.
The bank has now set aside £1.3 billion, up from £1 billion, to deal with PPI compensation after a recent increase in the number of claims, which have eaten into quarterly profits of its UK arm, it announced today.
Barclays pledged last year to pay all claims that were put on hold — pending a result of an unsuccessful case brought by banks to prevent payouts — on or before 20 April 2011.
Stripping out the cost of PPI and other one-off costs, the bank reported a 22% rise in pre-tax profits to £2.4 billion, against City expectations of £2 billion.
The news about Barclays's PPI provision comes as MoneySavingExpert.com and lobby group Which? launch a campaign to encourage consumers to reclaim for free.
A summit, hosted by the pair, and attended by banks and regulators on Monday, was intended to stop consumers wasting thousands of pounds by using a claims management firm (see our PPI Reclaiming guide).
As these companies typically take 30% of any claim, you'd be throwing away £825 on a typical £2,750 payout.
An agreement was reached to help victims get all their money back by making reclaiming for free easier.
Compensation paid to victims of payment protection insurance (PPI) mis-selling by all banks is likely to have passed the £3 billion mark since the start of last year.
The Financial Services Authority says £403 million was paid out in January, the latest figures available. A record £441 million was paid in December.
This takes the total to £2.5 billion since the start of 2011 but does not include the past three months. Assuming the pattern of roughly £400 million a month was paid in February, March and April, the total will have comfortably breached £3 billion.
But there is still a long way to go — it is estimated the total bill for all victims' redress could hit £9 billion.