Barclays set aside £4.1 billion to address ongoing PPI claims that were filed against it. The bank initially felt that provision would be more than enough, but a recent surge shows that figure may be insufficient. Executives are debating whether or not to increase the provision.
An executive from Barclays attributes the new surge to the efforts of financial claims companies. They said that many people have recently filed claims for PPI policies that they purchased over a decade ago.
The unexpected increase in PPI claims was one of the factors that precipitated a decline in revenues. The most recent company report shows that Barclays revenue fell from £1.8 billion to £1.7 billion in the first quarter.
Barclays executives are planning for new changes in the coming future. They are holding a meeting next week to assess many of their operations in other parts of Europe.
However, the PPI issue may be a more immediate priority in the months to come. They are worried that the surge of PPI claims indicates that the problem is far from resolved. However, it is possible that many of these claims are bogus, which would mean that the bank wouldn’t face new costs. The new claims could still create a number of headaches for the company and force it to hire more claims handlers.
Barclays argues that many of the new claims may not be real. They said that about 40-50% of them have no record of ever purchasing PPI policies before. While they attribute the new claims to the marketing efforts of claims firms, it is too early to tell. They may still face a number of new claims in the near future.
“As a result of this inflow of complaints there remains a significant level of uncertainty regarding future complaint volumes, including assessing their legitimacy,” the report stated.
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