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Barclays reviews its PPI provision after claims spike

BARCLAYS Bank is reviewing whether to increase its £4.1 billion provision for payment protection insurance mis-selling after reporting a spike in cases filed via claims handling firms, with some claims dating back to sales more than a decade ago.

The bank yesterday revealed a 5% fall in adjusted pre-tax profit to £1.7 bn in the first quarter of its financial year compared to a year ago after revenues fell sharply in the fixed income arm of its under-pressure investment bank.

The results come ahead of a planned strategy update from the bank tomorrow that is expected to see a further scaling back of its investment bank and activities in continental Europe.

Barclays, which has set aside £4.1 bn to cover PPI claims so far, reported that overall complaint volumes were down in the first three months of 2014 compared to the last quarter of 2013.

It said that 40% to 50% of claims received "have no record of PPI being sold".

But it said that March saw a "significant spike" in claims received via claims management companies "with the majority of these complaints relating to PPI sold over 10 years ago".

It added: "As a result of this inflow of complaints there remains a significant level of uncertainty regarding future complaint volumes, including assessing their legitimacy.

"This situation is being monitored closely including undertaking additional analysis and an assess- ment of the overall PPI provision."

Barclays' finance director Tushar Morzaria said: "What we have seen in March is a pick up or a spijke in claims we are receiving from professional claims management companies that relate to PPI dating back further than 10 years and in some cases considerably further than that.

"We are working through that."

He added: "Where these claims are quite old in nature, it could take some time to work through that."

Income from Barclays investment bank, long the driver of its profit growth was down 28% on last year, largely because of a 41% drop in fixed income, currencies and commodities (FICC), a sharper fall than at its rivals.

Barclays said it would give details of its strategic overhaul tomorrow, adding that the initial steps to overhaul its business had also affected first quarter income.

Mr Morzaria said that 450 jobs had gone in its investment bank in the quarter as it cuts back staff at director and managing director level. Cuts at the business "may or may not have prompted some people to move on", he said.

Barclays' shares fell 13.5p or 5.2% to 245p.

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