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PPI misselling bill tops 10 billion

Article by Simon Christopher
Posted: 21/10/2012 - Last updated: -
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Barclays has confirmed its has now set aside a total of £2 billion to pay compensation for mis-sold payment protection insurance. It takes the total banking sector costs to more than £10 billion, with predictions of the final bill hitting as much as £15 billion.

Barclays had previously earmarked £1 billion last year and £300 million earlier this year, with its latest financial figures including a £700 million charge. This isn't money it has actually spent yet, but rather expects to pay out: it's listed as an expense now so that investors can factor it in when valuing the company's performance and stock price.

The new charge puts Barclays in second place on the PPI banking list of shame behind Lloyds, which expects to pay out £4.3 billion. It's followed by HSBC on £1.7 billion and the RBS group on £1.3 billion.

Meanwhile the Financial Ombudsman Services said it now expects to receive a total of 330,000 complaints about PPI misselling this year, double its original estimates. It noted a consistent pattern of just over two-thirds of complaints being upheld. While cases vary significantly, the average award is £2,750. That pattern would mean banks paying out nearly £6.5 million for claims made this year alone.

PLEASE NOTE: News items are intended for information only and should not be relied upon when making business insurance decisions. Due to their nature, some of the information in news stories including any references to taxation, legislation, regulation, or other issues may no longer be current.

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