PPI reclaiming bill tops £6bn

It brings the total amount paid out for mis-sold PPI since January 2011 to £6.5 billion, although this figure is expected to significantly increase.

The largest monthly payout by lenders to date was £730.5 million in May this year, reports the Financial Services Authority (FSA).

Only last week, the total bill for mis-sold PPI at Barclays alone soared to £2 billion as the embattled lender revealed a further £700 million hit. It had already set aside £1 billion to settle claims in 2011, and another £300 million in the first quarter of 2012.

Earlier this year, most of Britain's banks unveiled larger funds for PPI compensation than initially forecast. Lloyds Banking Group has set aside the most, a whopping £4.3 billion.

There has been a huge jump in compensation payouts for PPI, which covers loan or credit card payments when people cannot work, since the British Bankers' Association trade body ended a legal battle in May 2011 which attempted to block the FSA's rules on compensation.

These rules force banks to review past sales of PPI and contact mis-sold customers to offer money back, even to borrowers who have never complained.

The FSA's figures come from the 24 firms responsible for 96% of complaints about the sale of PPI last year.