Lloyds Bank sets aside another £350m for PPI scandal bringing total bill to £17.3bn

Increased provision will cover rise in both number of claims and size of compensation payouts, following Supreme Court judgment on PPI complaints handling

Lloyds has seen its profits double (PA)

Lloyds Banking Group has forked out an extra £350m to cover mis-sold payment protection insurance claims, bringing its total bill for the scandal to £17.3bn.

The high street lender hived off additional funds after the Financial Conduct Authority extended its proposed deadline for new claims by two months to the end of August 2019.

Lloyds said the increased provision would also cover a rise in both the number of claims, and the size of compensation payouts, following the Plevin ruling - a Supreme Court judgment on PPI complaints handling.

"The additional provision has been taken to reflect the estimated impact of the policy statement including the revised arrangements for Plevin cases, which includes a requirement to pro-actively contact customers who have previously had their complaints defended," it added.

The part taxpayer-backed bank said the extra funds would be noted in its first-quarter results published in April this year.

The FCA said earlier this month that consumers would have until August 29 2019 at the latest to make their PPI complaint, but some, including those who have previously been told by their firm that they may have been mis-sold, may run out of time sooner.

A total of £26.2bn has already been paid out since January 2011 as a result of the PPI scandal, according to the regulator's figures.

The update comes after Lloyds posted its highest annual profits for a decade in February as it moved a step closer to full privatisation.

Its bottom-line profits more than doubled to £4.24bn last year from £1.64bn in 2015, marking its biggest profit haul since 2006.

However, the group said its performance was "inextricably linked to the health of the UK economy", which faces an uncertain outlook amid Brexit negotiations.

The Government reduced its stake in Lloyds to less than 4 per cent in February, cutting its holding by around 1 per cent.

It means more than £19bn has being returned to Government coffers since the lender's £20.3bn bailout.

PA