Barclays has reacted to increased claims for mis-sold Payment Protection Insurance (PPI) by adding £600million to its provisions for compensation as the number of complaints continues to accelerate at alarming levels.
Their latest announcement takes their total provision for PPI to £2.6billion and follows other leading British banks in increasing the budget set aside to settle claims, amid predictions that PPI compensation bills are set to soar.
The Financial Ombudsman Service has already had to hire around a thousand new staff to cope with the number of calls regarding PPI and received 145,546 complaints in just three months between October and December, 2012 – more than they received in any 12-month period between 2000 and 2010.
The Government-backed service steps in when banks and customers cannot reach an agreement and the latest increase in PPI disputes to more than 11,000 a week during the final three months of last year doubled the number of complaints made between April and June, 2012.
Britain’s leading banks have already set aside around £11billion to compensate customers who were mis-sold PPI policies, which were initially designed to protect borrowers who lost jobs or became ill and couldn’t keep up loan repayments.
Lloyds Bank have already spent around £5.3billion on the crisis, while Royal Bank of Scotland took its total to £1.7billion by adding £400million to its provision earlier this year, with analysts predicting the total pay-out for PPI compensation could eventually reach £15billion.