Britain 's biggest banks earmarked billions of pounds for 'remediation costs ' and fines over the last three years . Britain 's biggest banks have racked up a £39billion bill in just three years to pay for their financial scandals . ‘ Remediation costs ’ wiped out 61 per cent of their profits between 2011 and 2014 , according to accountants KPMG . The bill has been driven by the payment protection insurance scandal , with banks setting aside £4.7billion last year to compensate customers . Another £2.3billion was earmarked by banks including Barclays , Royal Bank of Scotland and HSBC to pay fines for rigging foreign exchange markets . The total charge for wrongdoing last year – £9.9billion – was only 8 per cent less than the previous year . Describing it as a ‘ problem that won ’ t go away ’ , KPMG said banks also face mounting costs from employing an army of compliance staff to keep them out of trouble . RBS is thought to be facing a multibillion-pound settlement in the US for mis-selling toxic bundles of mortgage debt – known as mortgage-backed securities – in the run up to the financial crisis . Barclays is also braced for a huge fine for rigging foreign exchange rates , having put aside £1.25billion so far to cover the bill . But the UK ’ s strengthening economy has driven a 72 per cent drop in losses from bad loans , with write-offs falling to £5.2billion last year . RBS was boosted by £1.4billion after not as many loans went sour as it had feared . This compares with an £8.1billion charge in 2013 . So-called ‘ impairment charges ’ at Lloyds fell £2billion to £752million as the improving economy meant fewer retail customers and businesses defaulted on their repayments . Scroll down for video . This translated into a surge in the bottom line , with Lloyds posting a £1.8billion profit , up from £415million in 2013 . RBS ’ s losses narrowed to £3.5billion last year from £8.2billion in 2013 . Barclays , HSBC and Standard Chartered all saw profits fall . KPMG said banks must ‘ urgently tackle ’ their low return on equity – a key measure of shareholder value – and need to invest in technology to increase their profits . Tougher regulations forcing them to hold more capital have made it more expensive for them to do business , especially in higher-risk areas . Banks including RBS and Barclays have responded by shrinking their investment banking arms . KPMG ’ s Bill Michael said : ‘ Banks are undergoing a once in a lifetime change , as they face evolving regulation , technology and society ’ s expectations … If further regulation creates too many strictures on non-retail banking , the industry risks losing its global relevance. ’ KPMG said banks must ‘ urgently tackle ’ their low return on equity and need to invest in technology to increase their profits .
Britain 's banks set aside £4.7billion last year in PPI compensation last year . Another £2.3billion was earmarked for fines for rigging foreign markets . Comment: