By Claire West
Barclays has announced that due to "higher than previously anticipated levels of Payment Protection Insurance (PPI) claim volumes" that they have made available a further £700 million.
This is in addition to provisions recognised of £1 billion in 2011 and £300 million in the first quarter of 2012. Based on claims experience to date and anticipated future volumes, the resulting provision includes Barclays best estimate of expected costs of future PPI redress.
PPI is an insurance product which covers the risk of a borrower being unable to repay their borrowing.
It typically covers accident, sickness, unemployment and death, but the detailed terms and conditions of different policies will vary. It is usually paid for either as a single up front premium (usually added to the amount of the underlying loan provided) or by separate monthly instalments.
Until recently, banks offered to arrange PPI for customers alongside their credit applications.
Many bank customers were mis-sold PPI and are claiming back payments as a result of professional negligence.
On 31 October 2012, Barclays will announce its third quarter Interim Management Statement. Barclays currently expects the Group adjusted profit before tax, which excludes the impact of own credit (expected to be a charge of £1.1bn) and the provision for PPI redress, for the three months ended 30 September 2012 to be broadly in line with current market consensus of £1.7 billion.