Barclays Ups Its Mis-Selling Funds By £1bn

Barclays is to increase the funds put aside for mis-selling to consumers and businesses by another £1bn, taking the total to £2.6bn.

The confirmation of the figure comes after Sky's City Editor Mark Kleinman revealed the additional set aside last night.

Kleinman said: "The fund for mis-selling of payment protection insurance (PPI) has gone up by £600m and for the interest rate swaps by £400m."

Barclays is also likely to have to set aside money for potential Libor-related litigation after being fined £290m last summer for manipulating the interbank borrowing rate.

The announcement comes just a week before the bank's new chief executive, Antony Jenkins, unveils a blueprint for rebuilding Barclays' reputation.

Chairman Sir David Walker and Mr Jenkins are appearing before the Parliamentary Commission on Banking Standards today.

Mr Jenkins, who used to run the retail banking division, is likely to be asked why the bank - and the industry - has consistently underestimated the scale of redress for PPI claims.

Last month, the head of Britain's Financial Ombudsman Service, Natalie Ceeney, said banks only had themselves to blame for the spiralling costs of the scandal, which she said could have been contained if they had addressed the issue earlier.

The ombudsman service, which steps in when banks and their customers cannot reach an agreement on compensation, said it was receiving up to 10,000 complaints each week about PPI, and had hired 1,000 new staff to cope with the caseload.

High street banks face a collective bill of around £12bn for mis-selling loan insurance designed to protect borrowers who missed repayments due to illness or redundancy.

Consumer groups that challenged banks over the way the policies were marketed and sold won a landmark court case in 2011, opening the floodgates to thousands of compensation claims over one of Britain's biggest ever consumer scandals.

Meanwhile, complex interest rate swaps designed for small and medium-sized businesses have also become a contentious issue.

An estimated 90% of 40,000 may have been mis-sold, and payouts may reach £500,000 for each affected firm.

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