The service expects to be dealing with the fallout from the scandal for "a number of years", despite a turning point having been reached with fewer complaints about PPI now being brought to it.
Setting out its proposed plan and budget for 2014/15, the Financial Ombudsman Service (FOS) said there were still over 400,000 unresolved PPI complaints on its books, but it aims to whittle this down to around 250,000 over the next year.
It also expects to receive another 150,000 new PPI complaints in 2014/15.
Tony Boorman, interim chief executive and chief ombudsman, said: "We're not out of the PPI woods yet.
"While we expect the volumes of PPI complaints to decline, the numbers are still likely to be substantial."
PPI is the most complained-about product the FOS has ever dealt with and accounts for over 80% of its work. In total, it has received more than one million PPI cases.