Barclays has put aside an extra £700m to pay compensation claims relating to the mis-selling of payment protection insurance (PPI).

 It follows Lloyds in allocating fresh funds to pay customers who are yet to make a claim.

 The two banks, which have now set aside around £27bn between them, are anticipating a rise in the number of claims as the deadline for making them approaches.

 The City regulator, the Financial Conduct Authority (FCA), has said consumers have until 29 August 2019 to make a claim.

 It is expected to launch a campaign next month encouraging those mis-sold PPI to get their claims in.

 Andrew Bailey, the FCA’s chief executive, said: “Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off.

 “We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint.

 “We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers.”

 As the deadline approaches, consumers should brace themselves for an increase in the number of texts and calls from claims management companies offering their services.

 But the FCA says making a complaint is free and most people shouldn’t need to use a claims firm.

 Its advice for anyone thinking they may have been mis-sold PPI is to complain directly to the lender involved, and to the Financial Ombudsman Service if they aren’t satisfied with the response.

 The consumer group Which? has launched its own PPI claims tool and is also advising people not to claim via companies that will charge a fee.

 Which? money expert Gareth Shaw said: “With banks now setting aside more money for PPI claims, it shows that the fallout from this mis-selling scandal is far from over and there are significant amounts of compensation due to consumers.

 “As the deadline approaches to make a claim, we’re urging consumers to use our free PPI claim tool rather than claims management companies, who can charge up to a third of the compensation offered.

 “We’re also calling for other banks to sign up to the tool and for the regulator to make free-to-use tools a more central part of its communications campaign.”