£300 million rise in Barclays PPI bill
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.
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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.
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