Barclays hints at higher PPI liability
Barclays has been forced to insert a new statement in its regulatory filings in the US to admit that the pace of PPI claims by customers has risen
Barclays has hinted that it might need to increase its £1bn provision for mis-selling of payment protection insurance after a surge in claims during March.
Just three weeks after publishing its annual report, the bank has been forced to insert a new statement in its regulatory filings in the US to admit that the pace of claims by customers has risen.
“Subsequent to the approval of the 2011 financial statements on 7 March 2012, Barclays has observed an increase in PPI complaint volumes in recent weeks. It is too soon to determine whether this increase may have a material impact,” the bank said in the filing for US regulators.
The bank took a £1bn provision for PPI claims in 2011, some £565m of which is yet to be used. It has made clear that it, like other banks, has based the value of the provision on a number of “interdependent assumptions” to decide on the value of the provision. It followed a move by Lloyds Banking Group to take a £3.2bn hit for PPI misselling.
The bank admits that many of the assumptions have been “highly subjective” and not always easy to measure. “When considering the key assumptions independently, the most significant driver of the provision is complaint flow. If the level of complaints were 10% higher (lower) than the estimated level for all policies, assuming no change in other assumptions, then the provision would have increased (decreased) by approximately £100m,” Barclays said.
The bank did not provide any detail about the increase in the size of complaints it had received in March, although data provided by the Financial Services Authority last week found that Barclays had been the most complained-about bank in the last half of 2011 – albeit not just for PPI.