July 3, 2013
A further £1.35 billion has been allocated to pay refunds of Barclays PPI – the bank hoping the latest PPI provision will be the last for eighteen months.
The bank topped up its fund to pay refunds of Barclays PPI after admitting that it considerably underestimated the volumes of complaints from customers or the length of time that it would continue to pay compensation for the mis-selling of payment protection insurance.
The total amount now allocated for to pay refunds of Barclays PPI now stands at £3.95 billion, and bank executives are hoping that this will be the last time it will have to make such a substantial provision for a very long time.
Barclays has already refunded more than £2.3 billion to customers who were mis-sold PPI since records were first maintained by the Financial Conduct Authority in January 2011, and the most recent provision of £1.35 billion is anticipated to cover refunds of Barclays PPI for the next eighteen months.
Barclays issued a statement saying that the bank hopes that it will soon be able to tell the company´s shareholders “that a line can be drawn under the PPI mis-selling scandal” – although, as there is no time limit in place for customers to claim refunds of Barclays PPI, the bank acknowledges that it could still be receiving PPI-related claims in ten years’ time.
The bank is current paying refunds of Barclays PPI at the rate of £85 million per month, and the bank claims to have contacted two-thirds of its customers that are entitled to refunds of PPI. Although the rate of claims for a refund of Barclays PPI has decreased by 46 percent since its peak last May, a corresponding decrease in refunds to customers has been far slower to materialise than first predicted by the bank.
Barclays Chief Executive – Antony Jenkins – commented said that historic PPI claims dating back from the 1980s were partly responsible for keeping Barclays PPI liabilities at such a high level. Mr Jenkins also announced a 17 percent fall in pre-tax profits to £3.6 billion over the first six months of 2013, and that Barclays would be trying to raise £12.8 billion via a rights issue.