Barclays has set aside a further £700 million to pay the victims of payment protection insurance (PPI) mis-selling.
The bank says it has already received two million customer complaints about PPI and expects this figure to grow. The number of new claims made in the first half of 2017 was 32% higher than the previous six month period.
A rush in claims has been expected as regulator the Financial Conduct Authority (FCA) confirmed earlier this year that all PPI claims must be submitted by 29 August 2019. Only complaints about PPI policies sold after 29 August 2017 will be permitted after this point.
An FCA marketing campaign encouraging consumers to make a claim before the deadline will begin next month.
The cumulative cost to Barclays of the PPI scandal has been £9.1 billion, including the £700 million earmarked for additional new claims today. Of this figure, £7 billion has already been paid to victims.
Only yesterday, Lloyds Banking Group also set aside a further £700 million to cover PPI claims.
‘The pressure is on for Barclays to perform’
Both the extra PPI provision and losses resulting from a wider restructuring of the business – such as the sale of Barclays’ African business – has meant the bank posted a £1.2 billion loss for the first half of 2017.
Laith Khalaf, senior analyst at Hargreaves Lansdown, comments: “The sale of Barclays Africa and more PPI costs are the main culprits for the bank’s woes so far in 2017.
“The bank’s restructuring is now complete, which is a significant milestone, but now Barclays is in the shape envisaged by management, the pressure is on to perform.
“To that end its figures for 2017 are far from convincing, with the core bank floundering, and progress actually coming from the non-core. The market will be hoping for a bit more positive news in the remainder of the year, though conduct issues may well overshadow the bank’s performance.”