Banks 'set to take mis-selling hit'

Britain's top four banks are reportedly set to take another £1 billion hit for mis-selling payment protection insurance - bringing the industry total to nearly £8 billion.

Lloyds Banking Group, Barclays, HSBC and Royal Bank of Scotland will all disclose additional charges for the period between April and June in their half-year results.

Lloyds and HSBC, which report on Thursday and Monday respectively, will say that they set aside more than their PPI provisions for the first quarter of £375 million and £300 million, Sky News said.

RBS is expected to confirm that it is making a further allocation similar to its £125 million first-quarter charge when it reports on August 3, while only Barclays is expected to allocate a smaller sum than its earlier £300 million provision on Friday.

The latest figures will underline the serious impact the mis-selling scandal has had on Britain's biggest banks and comes amid calls for an overhaul of the industry's culture and business practices following the rate-rigging scandal.

Britain's top lenders have also been accused of mis-selling complex interest rate hedging products - known as swaps - and have agreed to pay compensation.

Taxpayer-backed Lloyds will have paid out at least £4 billion alone for its mis-selling activity and will face questions over its involvement in the Libor-fixing scandal when it reports on Thursday.

Lloyds has previously admitted to "assisting the regulators" with their Libor investigations but would not comment further.

If the Financial Services Authority uncovers evidence of rate-rigging, the bank could face a multi-million pound fine, possible compensation claims and reputational damage.

But despite the difficult climate the bank is set to announce broadly flat underlying pre-tax profits of £1 billion for the first six months of the year.