Though Barclays Bank has announced it believes the £360 million it has left in its PPI pot will be enough to pay all future successful claims it has not ruled out having to add more in the future.
The statement came in the release of its half year figures just weeks before the PPI claims deadline on August 29th. It says the amount is its ‘best estimate’ of the amount needed to pay expected compensation levels of just over £2,200 per claim.
But in common with most other high street banks it says the increased number of claims prompted by the deadline could mean that its provision will require a further top-up.
To date the bank has set aside a total of £9.2 billion, making it second in the list to Lloyds Banking Group (LBG) which has just added another £½ billion to its own provision to take its overall total to just over £20 billion.
Barclays says it has processed 2.6 million complaints so far but is unsure how many more it might face ‘mainly due to the uncertainty associated with the remaining future claims levels, which include complaints driven by Claims Management Company (CMC) activity and the FCA advertising campaign’.
Its current estimate is for an additional 134,000 claims before the deadline and it expects to uphold an average of 87% of them at an average compensation level of £2,286.
But its estimates only go as far as the deadline date and its statement added: “However, it is possible the eventual cumulative provision outcome may differ from the current estimate.
“Barclays will continue to review the adequacy of the provision in respect of the future impacts, including after the complaints deadline, as not all costs will be settled at that point.”
Overall the bank has reported a drop in half year profits to £3.13 billion from £3.7 billion last year, citing a “challenging income environment” and also one-off accounting measures.
The retail side of the business saw growing mortgage and deposit growth, but profit margins fell.
The investment bank did less well with profits falling 15% to £1.7bn.