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Barclays provisions extra £1.6B for surge in PPI claims

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Barclays provisions extra £1.6B for surge in PPI claims

Barclays PLC expects to increase its provision for payment protection insurance claims by £1.2 billion to £1.6 billion in its third quarter results.

The bank said Sept. 9 that it had received a significantly higher than expected number of PPI-related claims, inquiries and information requests in the run-up to the Aug. 29 deadline.

Barclays said at its interim results for the six months to June 30, 2019, that it had a cumulative provision of about £9.6 billion for PPI redress. It had used £9.2 billion, leaving £360 million unused. The bank will have paid out £11.2 billion if claim payments now reach its upper end of expectations.

The bank’s announcement after the stock market shut on Monday follows similar announcements from other leading banks. Lloyds Banking Group PLC earlier on the same day said it had set aside between £1.2 billion and £1.8 billion after receiving a last-minute surge in applications ahead of the deadline.

CYBG PLC and the The Co-Operative Bank Holdings Ltd said last week that they would also set aside further provisions in relation to PPI.

The surge in claims follows a high-profile advertising campaign launched by the Financial Conduct Authority in June urging consumers to claim for PPI misselling.

About 64 million PPI policies were sold with the aim of providing consumers with cover for loans on credit cards and mortgages and other products. Consumer groups estimated up to a third were entirely useless and in 2011 the banks were forced to pay redress. In total, banks' provisions for PPI are estimated at £45 billion, according to S&P Global Ratings.