RBS has set aside an additional 125 million to cover payment protection insurance (PPI) claims, as the realisation of the true scale of the mis-selling scandal grows by the day.

The RBS Group, which includes the Royal Bank of Scotland and NatWest, has now put aside a total of 1.2 billion for PPI claims, of which 501 million in redress had been paid by 31 March.

It says the move to put aside the extra 125 million is to reflect the huge increase in claims received.

RBS is not alone, as other banks have been forced to up their provisions in light of the massive consumer backlash.

Taxpayer-backed Lloyds Banking Group announced this week it had taken an additional 375 million hit to cover PPI claims. It has now set aside nearly 3.8 billion.

Banking giant Barclays last week announced it too had taken an additional 300 million hit to cover PPI mis-selling claims. The bank has now set aside 1.3 billion.

It is estimated the final, combined bill could hit 9 billion.

The Financial Services Authority revealed on Tuesday that compensation paid to victims of PPI mis-selling by all banks hit 3 billion for the 14 months between January 2011 and February 2012.

The news comes as the RBS Group today revealed a loss before tax of 1.4 billion for the three months to 31 March, compared to a 2 billion loss last year.

Additional reporting by the Press Association.

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