View the article online at http://citywire.co.uk/money/article/a656027
Barclays' mis-selling costs rise another £1 billion
The bank has had to add another £1 billion to cover the cost of mis-sold products.
Barclays has had to add £1 billion to its compensation fund to cover the cost of mis-selling to consumers and companies.
The bank has increased the amount of money to repay customers mis-sold payment protection insurance (PPI) by £600 million, taking its cumulative redress funds to £2.6 million.
Barclays (BARC.L) shares gained 2.75p or nearly 1% to 294.25p on a good day for markets. Its shares have risen 12% this year and have gained 24% in the past 12 months.
The bank released the figures ahead of its full-year results on next week, in which new chief executive Anthony Jenkins will set out how he intends to reshape the bank following the Libor rate fixing scandal, which cost the bank £290 million in fines and forced the departure of his predecessor, Bob Diamond.
In total the high street banks have put aside £12 billion to cover PPI mis-selling, which has become the most complained about product of all time. Due to the rising number of PPI complaints the Financial Ombudsman Service said it had received more complaints in the last three months of 2012 than it had in any full year between 2000 and 2010.
A total of 244,873 PPI complaints were made in 2012 and the FOS is currently taking on between 8,000 and 10,000 new PPI complaints each week.
Barclays is also putting more money aside to cover another mis-selling scandal, almost doubling the amount of money to cover the cost of mis-selling of interest rate swaps to £850 million, from £450 million.
The redress for interest rate swaps comes after a review of the sale of the products by the Financial Services Authority (FSA). It found that Britain’s four big banks – Barclays, Lloyds, Royal Bank of Scotland and HSBC – mis-sold over 90% of the products sold to small businesses.
The four banks had set aside just £700 million to cover the cost of this most recent mis-selling scandal although analysts estimated the cost at around £2 billion.
Around 28,000 interest rate swaps – designed to hedge against interest rate changes – have been sold since 2001.
Barclays finance director Chris Lucas announced over the weekend that he was stepping down.
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