Barclays is struggling to keep up with payment protection insurance (PPI) claims from its customers, adding another £600 million to its redress fund.
As with Lloyds, which announced a £1 billion hike to its PPI provisions yesterday, Barclays expects more claims from customers as an expected deadline for PPI claims has been pushed back to 2019 against expectations of an earlier cut-off point.
The bank has not provided an update on how many people have successfully claimed for historic PPI mis-selling, but its most recent disclosure shows over 1.7 million have successfully appealed PPI charges, each receiving £1,850, on average.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown says, “Like Lloyds, Barclays has been hit by a big PPI charge as a result of the FCA’s decision to call time on complaints in 2019, rather than 2018 as had been expected. Barclays has also seen a pick-up in credit impairments, though some of this comes from a more prudent approach to modelling bad loans.
Barclays has now allocated a staggering £8.4 billion to provide recompense to borrowers who were inappropriately sold PPI, though that figure is dwarfed by Lloyds’ anticipated £17 billion bill.
Today's announcement also reveal profits for the year stand at £2.9 billion, around 10% lower the first nine months of 2015. As well as redress provisions, Barclays’ bottom line was hit by rising bad debt at the bank, with a £769 million charge to write off debts, largely through its UK Barclaycard brand.