One of the biggest mis selling scandals in recent history is that of the selling of Payment Protection Insurance (PPI) policy alongside a personal loan, home owner loan or credit card and although the banking sector has called for a deadline for loan customers to make complaints about their policy, it looks as though there is still a long way to go with regard to new claims.
Barclays bank has announced that it is increasing its provision for the mis selling of PPI policies alongside a loan to £2.6 billion in anticipation of further claims from loan customers. At the same time, the bank is also increasing its funding for the mis sale of interest rate hedges to a total of £850 million.
In total, this means that Barclays bank is increasing its provision for mis selling of loans and other financial products by £1 billion.
It is not only Barclays which faces this problem. The other main high street banks, such as Lloyds TSB, HSBC and The Royal Bank of Scotland have put aside at least £12 billion already in order to cover the cost of mis sold PPI policies alongside a personal loan or home owner loan.
The news is just one more piece of bad news for the banking industry as a whole in the UK at the moment and is likely to drive more people away from high street banks when looking for a new loan or other financial products.
The loan industry has already seen a shift away from high street bank loans, with many people looking for alternative sources for their loan, such as mutual lenders and building societies, as well as credit unions and newer forms of borrowing, such as peer to peer loan companies.