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Barclays Bank to pay PPI compensation Banking industry gives up on PPI mis-selling battle
(40 minutes later)
Barclays Bank has set aside £1bn to pay compensation to customers who were mis-sold payment protection insurance (PPI). The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI).
Barclays announced on Monday that it would not appeal against a court ruling that banks must redress complaints about PPI. The British Bankers' Association, which fought the case, said it would not appeal after losing a court challenge against new rules on mis-selling.
It follows a similar decision by Lloyds Banking Group last week. Separately, Barclays Bank said it had set aside £1bn to pay PPI compensation, and RBS said it would not contest the court ruling.
In a separate statement on Monday, the British Bankers' Association said it also would not be appealing. Last week, Lloyds Banking Group made a £3.2bn provision for possible claims.
PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.
But the policies were mis-sold, many to self-employed or unemployed people who would not have been able to claim, and to consumers who did not realise they were taking out a policy.
Last month the High Court ruled that the banks were at fault.
Royal Bank of Scotland confirmed on Monday that it would also be addressing customers' complaints, but said it had yet to decide how much to set aside for possible claims.
HSBC has yet to make a statement on the issue following the BBA's announcement. The bank is due to release a first-quarter trading update later on Monday
In a statement the BBA said: "In the interest of providing certainty for their customers, the banks and the British Bankers' Association have decided that they do not intend to appeal."
Separately, Barclays chief executive Bob Diamond said the bank would now begin the process of compensating customers.
"We don't always get things right: when we get them wrong, we apologise and put them right.
"We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders. Creating certainty, particularly regarding past issues, is of benefit to all parties," Mr Diamond said.
The Financial Services Authority has estimated that banks will have to pay up to £4.5bn ($7.4bn) to settle thousands of claims.