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Banks and financial services companies have astonishingly racked up over £40bn in costs associated to the mis-selling of payment protection insurance.

PPI became the costliest scandal in UK banking history some time ago, however, Barclays announced this week that it had set aside a further £600m to handle the cost of further claims.

Data collated by the New City Agenda think tank shows that the latest top up has pushed total costs to £40.2bn of which Lloyds Banking Group is responsible for £17bn.

These payouts have already been attributed to rising holiday and car sales.

Not all the money has gone straight to consumers. The latest data from the Financial Conduct Authority shows that millions had been distributed by the banks and other firms which sold PPI to cover fines and reprimands that had been imposed on them by the regulatory bodies.

The banks incurred billions of pounds of costs in handling claims. They have not used all the money they have set aside in anticipation of more applications for compensation.

More than 50m PPI policies were sold, according to the former City regulator the Financial Services Authority. Banks sold around 45m policies, worth more than £40bn.

A consultation run by the FCA into setting a deadline for claims closed earlier this month and could result in a cut-off point of June 2019 for remaining customers to make their case. It will also herald an advertising campaign, expected to cost £40m (a bill footed by the banks), to encourage customers to come forward and beat the deadline.