Barclays bank takes 600m hit over insurance mis sell

London: British bank Barclays on Thursday said it had set aside an extra 600 million ($733 million, 672 million euros) to compensate customers mis sold insurance, a day after rival Lloyds gave a similar update.

Barclays said the additional funds needed to cover costs linked to the long-running payment protection insurance (PPI) scandal contributed to it posting almost flat net profit of 414 million for the third quarter.

In 2011, British banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards.

PPI became controversial after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments. British authorities subsequently banned simultaneous sales of PPI and credit products.

To date, British lenders have been forced to set aside around 31 billion to cover PPI compensation costs. The worst affected bank is Lloyds, which on Wednesday said it was setting aside another 1.0 billion for PPI claims and bringing its total cost alone to 17 billion, far higher than any other bank.