Barclays’ bill for PPI mis-selling jumps to £2bn

Published on 19/10/2012 00:00

The bill for mis-sold payment protection insurance (PPI) at Barclays has soared to £2 billion, as claims against the banking giant continue to pile up.

The embattled lender unveiled a further £700 million hit following provisions of £1bn in 2011 and £300m in the first quarter of 2012.

The higher charge comes after the Financial Ombudsman Service warned PPI complaints were on course to more than double the 165,000 it had anticipated this year.

The majority of Britain’s banks unveiled larger PPI provisions during the half-year results season, but Barclays did not reveal a further charge.

Lloyds Banking Group has racked up a PPI compensation bill of £4.3bn, HSBC £1.7bn and Royal Bank of Scotland £1.3bn.

Barclays said it expected adjusted pre-tax profits, which exclude the impact of own credit and PPI provision, for the three months to 30 September to be in line with market expectations at £1.7bn.

The higher PPI charge comes as Barclays fights to restore its reputation in the wake of a series of scandals, including the Libor-fixing affair and the mis-selling of interest rate swap arrangements.

About £10bn has been set aside by the banks to cover claims made by people who were sold insurance they did not want or need, but some consumer groups say even this might not be enough to cover the scale of the problem.

PPI policies were meant to help people pay back their loans after a loss of income, but a widespread mis-selling scandal emerged, with some finding they had taken out the insurance without realising it.