Consumers who have been mis-sold loan insurance could be in line for a payout after a judge ruled against UK banks in a landmark case.
The British Bankers' Association had called for a judicial review after the industry regulator, the Financial Services Authority, decided banks should compensate anyone who was previously mis-sold payment protection insurance.
What is PPI?
Payment protection insurance is taken out to cover repayments of loans should you fall ill or find yourself out of work.
Banks have already paid compensation to thousands of people who contacted them to complain about mis-selling.
But last year the FSA published guidelines stating banks should contact all past PPI customers and give them the option to complain if they thought they had been mis-sold PPI. Banks disagreed with this and launched the judicial review.
However, the High Court ruled against the banks, meaning billions of pounds could now be paid out. Andrew Hagger, spokesperson for Moneynet, suggests this could cost banks between £2 billion and £3 billion, while some reports claim it could be as much as £4.5 billion.
The BBA says it is disappointed with the result but is considering appealing. It has 21 days to do so.
Spokesman Richard Herridge says: "While the UK banking industry has to date implemented every reform on PPI sales and complaints handling required by the regulators, the additional requirements in the policy statement effectively apply new standards to past sales, which we believe go beyond the rules and regulatory requirements which were developed by the regulator over time."
How to tell if you were mis-sold PPI
Today's ruling is set to open a floodgate for possible claims. So how do you know if you were mis-sold?
* Was it made clear to you that the PPI was optional?
If you feel you were forced to take out cover then you could have been mis-sold.
* Was it explained to you that past medical conditions mean you are not fully covered?
Many policies do not cover existing medical problem so if you have to be off work due to an existing problem your PPI may not pay out.
* Were you unemployed at the time you took out the PPI?
Most PPI policies include unemployment cover. If you were unemployed or retired at the time then this cover is of no use to you.
If you believe you were mis-sold PPI first contact your provider explaining your case. Failing that you can go through the Financial Ombudsman Service. Go to financial-ombudsman.org.uk and fill out the necessary form.