The Financial Conduct Authority (FCA) said on Monday that payouts totalled £260m in May alone, the highest monthly value since June 2016. Since 2011, £27.4bn has been paid out to customers.
Many more claims are expected, potentially adding billions to payouts. Banks have set aside around £40bn to deal with PPI claims, with both Lloyds and Barclays last month increasing their provisions by £1bn and £700m respectively.
Banks face added pressure later this month when the FCA kicks off an advertising campaign encouraging customers to claim PPI compensation, two years before the final deadline for claims. The £42.2m scheme, which is being funded by lenders, is due to kick off on 29 August.
It is estimated that only one in four PPI claims has been lodged so far. Nick Baxter, chairman of the Professional Financial Claims Association (PFCA), calculates that around £50bn of PPI was mis-sold and that, because of interest, the cost to banks would be up to £100bn if it was all claimed. This would mean that less than 30 per cent has so far been paid out.