Failings cost Co-op Bank £105m more
The bank, which is in the middle of a rescue plan after a £1.5 billion black hole was identified in its balance sheet, said it has had to increase its provision for customer redress.
However, it also revealed that regulators say the amount needed to cover the wider issue of the hole in its finances does not need to be increased.
The update comes amid speculation that details of a rescue plan which would have seen Co-op Group retaining a majority stake in the bank while floating a chunk on the Stock Exchange have been rejected.
The Co-op announced earlier this year that it had set aside £269 million to compensate PPI customers so the new provision may see the amount climb to £300 million or more.
This has been recalculated due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.
Co-op has not disclosed how much of the extra provision it has announced is specifically for PPI.
The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.
Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.
The bank said the overall new provision of £100 million-£105 million also took into account "the identification of a technical breach of the Consumer Credit Act".
This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.
The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.
Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.
The bank did not give an update on its recapitalisation plan but said it expected to announced further details shortly.
The lender is attempting to plug a £1.5 billion black hole in its balance sheet through a painful fundraising which will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.
Hedge funds represented by investment bank have demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.
The wider Co-op Group had insisted there is ''no plan B'' to saving the bank but now appears to have had to acquiesce to the demands.
The bank later issued a statement on its rescue plan, saying: "We currently expect that many elements of any recapitalisation plan will be materially different to the outline provided on June 17."
It added: "The board of the group remains committed to delivering a solution that provides both the necessary capital for the bank, while preserving its ethical focus, and an acceptable outcome for bondholders, including private investors."
Co-op said it had been consulting its bondholders and "seeking to balance the requirements and expectations of these parties".
It said: "The plan continues to evolve through the process of consultation and negotiation with bondholders, therefore we cannot provide further detail at this stage.
"Constructive engagement with bondholders is continuing and the group remains confident that a proposal to recapitalise the bank can be agreed and put to bondholders. We will make a further announcement when appropriate."
© 2013 Press Association