In a statement the group – which has already announced a major recapitalisation plan to avoid a government bailout after racking up big losses on commercial property during the downturn – said it would be increasing its overall provisions to cover any claims.

It said: “The Bank has made a re-assessment of certain likely future conduct costs and, as a result, the Bank expects to increase its overall provisions by approximately £100-105 million.

“The Bank’s estimates of existing provisions relating to customer redress have been revised, with these revisions relating primarily to a change in assumptions regarding the future costs of PPI redress, arrears charges and the processing of certain mortgage interest “first payments”.

“An additional provision has also been made in relation to the cost of customer redress that will be required following the identification of a technical breach of the Consumer Credit Act.”

It is yet more bad news from the group following a woeful summer. In June Co-op Bank, which has 4.7 million customers, said its bondholders must convert their debt to shares before it would inject £1bn of capital to prop up the bank and meet capital requirements.