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Barclays Ups Its Mis-Selling Funds By £1bn

(c) Sky News 2013

Barclays (LSE: BARC.L - news) is to increase its funds put aside for mis-selling to consumers and businesses by another £1bn, taking the total to £2.6bn.

Sky's City Editor Mark Kleinman - who revealed the news on Wednesday - said the provision for the mis-selling of payment protection insurance (PPI) had gone up by £600m, and the amount to cover interest rate swaps had increased 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 news came ahead of an appearance by the bank's chairman, Sir David Walker, and chief executive, Antony Jenkins, at the Parliamentary Commission on Banking Standards.

Mr Jenkins, who was appointed head of the bank in August, said he repeatedly raised concerns about the company's culture with its board and former chief executive Bob Diamond.

He said "actions" were needed rather than words, and assured MPs he was taking action to address the "aggressive" and "self-serving" culture.

"It is true to say we had debate over various topics concerning citizenship," he said.

"I raised the point repeatedly that it's actions that count and not words."

Mr Jenkins said he would be prepared to "do the right thing" if Barclays was hit by another scandal.

"I believe that the chief executive is responsible for what happens during his or her tenure at an organisation," he told MPs.

"If there were a grave regulatory event that happened on my watch then I would feel obliged to resign."

It comes just a week before Mr Jenkins unveils a blueprint for rebuilding Barclays' reputation.

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 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 (BSE: HIGHSTREE.BO - news) banks face a collective bill of around £12bn for mis-selling loan insurance designed to protect borrowers who miss 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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