YORK credit card insurer CPP has set aside an extra £3 million towards the cost of compensating customers who were mis-sold products.

The total cost of the redress scheme, which closed on August 30, was originally predicted to be £69.8 million.

But the company, based at Holgate Park, said the total cost provided for customer redress and associated costs was now put at £72.8 million.

A spokeswoman said the process to restructure the Group's balance sheet, strengthen its capital position and consider its potential sale was on-going, and further announcements would be made in due course.

The compensation scheme came into effect on January 31 after being sanctioned by the High Court, and it followed CPP being fined a record £10.5 million in November 2012 after regulators found it gave misleading and unclear information about credit card and identity theft insurance.

About seven million people were invited to apply for payouts, with the average sum received by claimants standing at around £188.

The mis-selling scandal ran from 2005 to 2011, although only a proportion of the policies sold were arranged directly through CPP, which employs about 550 people in York.

The Press reported last month that a sale process had begun for CPP as the business explored all options to stabilise its balance sheet for a return to growth.

The firm said it was looking to secure new agreements with creditors, funded by new equity capital, and said it had received indications of interest to subscribe for £9 million of new equity. However, there could be no certainty that an agreement would be reached with creditors.

Group chief executive Brent Escott told The Press then that a key milestone had been completing the compensation scheme but it had cost more than had been expected. "In fact, it was nearly double what we thought it would be," he added.