State-backed bank RBS said today it could not reliably estimate total liabilities for PPI sales although they could be 'material'.
The announcement comes the day after Lloyds said it had made a provision of £3.2bn for PPI claims, double analysts' estimates, leading to a fall in UK bank shares.
RBS said it continues to settle claims where it believe the customer has not been treated fairly or has suffered some detriment.
"However, a decision on appeal of the court case, led by the BBA, has not yet been made as it relates to important other issues of retrospective regulation," it said.
"The uncertainties around the outcome of the PPI action mean that, at this time, the Group is unable reliably to estimate any potential financial liability, although it could prove to be material."
RBS saw its losses widen in Q1 to £528m, compared with losses of £248m in the same period last year.
This included a charge of £469m from a market valuation of credit insurance provided to RBS by taxpayers under the Asset Protection Scheme. It also revealed an impairment charge of £1.3bn in relation to Ulster Bank.
However, operating profits were up almost £1bn to £1.05bn compared to Q4 2010. Its insurance arm, which RBS is committed to disposing, also returned to profit.
RBS reported it exceeded its business lending targets for the March 2010 to February 2011 Lending Commitments period, with gross new facilities totalling £56.9bn extended to UK businesses during the period, £6.9bn above target. Net mortgage lending was £1.4bn above target at £9.4bn.
The results come after the Treasury Select Committee (TSC) said yesterday it has commissioned an independent review of the FSA's report into the collapse of RBS. It wants to scrutinise why the regulator failed to spot problems at the bank.
Calling for 'imaginative and creative' approach to negotiations
The chairman is pretty sure what IFA stands for
Ahead of German election
Existing investors given three-week headstart
Pricing in a rate rise