UK banks' bill for mis-selling loans insurance hits 18 bln pounds

LONDON, March 12 (Reuters) - Britain's banks and otherlenders have paid out 18 billion pounds ($27 billion) tocompensate borrowers mis-sold payment protection insurance(PPI), after paying out 339 million pounds in December, thefinancial regulator said.

The bill for December was an increase on the 330 millionpounds paid out by banks the previous month and higher than the324 million paid in the same month the year before, according todata from the Financial Conduct Authority (FCA).

Banks such as Lloyds, RBS, Barclays and HSBC expect the bill to rise further andhave set aside more than 24 billion pounds to compensatecustomers mis-sold payment protection insurance.

The policies were meant to protect borrowers in the event ofsickness or unemployment but were often sold to those who wouldhave been ineligible to claim.

The FCA said in January that it would consider imposing adeadline on customers claiming compensation, potentially drawinga line under the country's costliest consumer finance scandal.

($1 = 0.6716 pounds) (Reporting by Matt Scuffham; Editing by Greg Mahlich)