PPI payouts to hit £11bn

As RBS prepares to increase its funds set asside for PPI payouts today, the overall bill is expected to hit the £11bn mark.

Lloyds Banking Group yesterday said that PPI compensation costs would hit £5.3bn as it set aside a further £1bn against claims, while RBS is expected increase its bill by a further £400m to reach £1.7bn.

Barclays also confirmed this week that it had thrown an extra £700m into its PPI pot - which already stands at £1.3bn.

Consumer magazine Which? reportedly expects the compensation bill to reach at least £12.3bn, exceeding by £500m the £11.8bn cost of pensions mis-selling.

According to the FT RBS, which announces third-quarter results today, will also earmark another several tens of millions of pounds for the IT failure that plunged millions of the bank’s customers into chaos this summer.

The bank has set aside £125m with its second-quarter results for the IT breakdown caused by a failed upgrade to the software used to process day-to-day payments, the FT writes.