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Barclays PLC increased the amount it had set aside to deal with claims in the U.K. insurance mis-selling scandal by £700-million to £2-billion last week; the industry could face an overall bill of up to £15-billion.

Lefteris Pitarakis/The Associated Press

Britain's Financial Ombudsman Service is getting up to 400 complaints an hour from consumers who believe they were sold unwanted insurance products, pointing to a further rise in the compensation bill for banks.

The Ombudsman, which deals with cases where banks and their customers cannot agree a settlement, said it had received more than140,000 complaints about payment protection insurance (PPI) since the start of the financial year in April, compared with 157,716 for the whole of the previous year. It received its 500,000th complaint on Tuesday.

"Despite these record numbers, this mis-selling scandal shows no sign of slowing," said Chief Financial Ombudsman Natalie Ceeney.

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PPI has become one of the worst consumer financial scandals in British history. PPI policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost jobs, but they were often sold to people who did not want or need them.

Barclays PLC increased the amount it had set aside to deal with claims by £700-million to £2-billion last Thursday and the industry could face an overall bill of up to £15-billion.

Analysts expect Lloyds Banking Group PLC, Royal Bank of Scotland, HSBC Holdings PLC and Banco Santander SA to reassess their provisions when they publish results in the next fortnight.

The Ombudsman said it was currently upholding seven in ten cases in the consumer's favour, with compensation averaging £2,750.

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