This is how much more RBS could end up paying out for payment protection insurance (PPI)

The part-nationalised bank said the number of claims last month was “significantly higher than expected”, with a spike in the final days before the August 29 deadline.

It said it now expects to take a charge of between £600m and £900m for payment protection insurance (PPI) in its third quarter results.

This comes on top of the £5.3bn in provisions already set aside by the bank.

The industry has seen a rush in PPI mis-selling claims this year before the deadline, with a pick up in the final few months and a flurry in the final days.

Santander was forced to extend its deadline for claims to be submitted after complaints its website was not working, which it said was due to high numbers of customers contacting it about PPI.

RBS’s PPI charge looks set to dent its third quarter figures after a robust first half for the lender, which saw it deliver a £1.7bn special dividend payout for shareholders, offering a surprise windfall for the taxpayer.

The dividend cheer followed its highest half-year bottom-line profits in more than a decade, with attributable profits jumping 130 per cent to £2bn.

Meanwhile, operating pre-tax profits outstripped forecasts, rising 48 per cent to £2.7bn.

But RBS - which is still 62 per cent owned by the Government - made no further PPI provisions for the half-year at the time.

An estimated 64 million PPI policies were sold in the UK - many in the 1990s and early 2000s.

PPI was routinely added to products such as store cards, credit cards or mortgages.

It was intended to protect people if they could not keep up with their payments, due to illness or unemployment for example.

But it was widely-mis-sold, with customers pressured into buying it, while many did not know they had it, or found it was unsuitable for them.