Bank pays out £1.6bn in PPI claims



Barclays has dealt with more than one million claims for mis-sold payment protection insurance (PPI) - but just four in 10 of them were upheld, its report says.

The banking giant said that £1.6 billion of the £2.6 billion it has put aside to compensate customers for mis-sold policies has been paid out, including goodwill payments.

By the end of last year, 1.1 million PPI claims initiated by customers had been received and processed, of which around 39% were upheld, Barclays said.

In addition to this, Barclays has written to 100,000 policyholders to raise awareness that they could be in line for a payout and it will write to a further 650,000 people by June.

The average payout made by Barclays for a valid claim is £2,750 including interest and Barclays said that its uphold rate reflects a "high proportion" of claims for which no PPI policy exists.

Claims management companies (CMCs), which typically take a quarter of any payout, are said to have prompted large numbers of speculative claims.

Barclays said that almost half of the claims which have been brought to it by CMCs are either duplicating a claim which has already been made or are for a non-existent policy.

The bank expects to deal with a further 450,000 customer-initiated claims in total. However, it said that future claims levels remain "uncertain" and could result in future provisions needing to be beefed up or scaled down.

It said that the volume of claims has declined since a peak in May last year, although the rate of the drop off has been lower than previously expected.

Around £14 billion has been set aside by banks across the industry to cover the cost of PPI compensation claims, but some analysts have predicted the eventual bill could be as high as £25 billion as the scandal has surged beyond expectations.

© 2013 Press Association