The fallout from the mis-selling of payment protection insurance in the UK continues to run rampant as banks see profits wiped out by compensation bills that continue rising and are due to hit the £10bn mark this week.

Results for the third quarter of the year from three of the UK’s largest banking groups are expected to show that any profit generated has been obliterated by the extensive pay-outs made in light of the payment protection insurance (PPI) mis-selling scandal.

Lloyds, Barclays and Royal Bank of Scotland have had to pay out billions in compensation for mis-selling payment protection insurance. These policies were sold alongside mortgages, loans, and credit cards. They were meant to repay any borrowings in cases when people became ill or lost their jobs.

Banks realised the policies were highly profitable and they were sold aggressively, sometimes without the customer even knowing they were signing up for one or after they were told they had no option but to buy PPI. Policies were also sold to people who were self-employed and would never be able to claim and were often structured in a way to limit the changes of a payout to someone who was genuinely ill.

As soon as the Financial Services Authority began its investigation, it became apparent that banks were going to be made to pay for the grave misstep, but it seems, the banks may have underestimated the depth of the scandal.

Many, including the three aforementioned banks, announced increases to the amount of money to be set aside to cover the compensation payments. According to the Financial Ombudsman Service, Barclays received the most PPI complaints over the first six months of 2012, totalling 19,522, followed by Lloyds with 9,493.

This scandal and its magnitude have done little to encourage the already fragile relationship between financial institutions and retail investors. Although the individuals who do receive compensation are no doubt satisfied, the scandal has also led to the creation of a new breed of ambulance chasers.

Companies to help individuals claim compensation have been mushrooming all across the UK and as a result, individuals are not only disenchanted due to the mis-selling itself but are also now being hounded by companies wanting to assist them in their PPI claims.

Trust takes years to build and seconds to destroy. So considering the scale of this mis-selling malignancy coupled with the likes of the Libor fixing scandal, one would not be surprised if any trust in banks that had been rebuilt post-crisis has gone the way of the bank profits and been obliterated.