Lloyds Banking Group has become the latest high street lender to increase the amount of money it needs to pay out for mis-selling Payment Protection Insurance, following a surge in claims.
The bank said it would suspend a planned £1.75 billion share buyback scheme, setting aside £600 million to meet the demand.
Bosses revealed that, in the month leading up to the PPI deadline of August 29, claims per week more than trebled from around 190,000 to between 600,000 and 800,000.
The decision comes after Royal Bank of Scotland, Co-op and CYBG, which owns Virgin Money, Clydesdale and Yorkshire banks, increased their own PPI provisions following a surge of interest before the deadline.
Lloyds said the extra claims are expected to see a £1.2 billion to £1.8 billion charge added at its next set of results, taking the total for PPI provisions to more than £20 billion.
However, Lloyds said it remains uncertain over the true level of claims, pointing out: "While the quality of these complaint volumes remains uncertain, given initial sampling, we believe the quality has continued at a low level."
Banks had complained in the past that customers were making claims even though they had never even taken out loans with the banks.
Lloyds had already revealed a £650 million PPI charge at its half-year results, for the six months to July 31, but Monday's announcement will see that figure grow.
In the last few weeks, CYBG said it is setting aside an extra £450 million after 340,000 customers requested information over PPI.
Co-op Bank also said it had received a flood of requests, and Santander UK was forced to extend the deadline after its website crashed under the strain of applications.
RBS said it could take a further £900 million hit over the claims when it releases its third-quarter results later this year.