If a recent ruling by the UK Supreme Court on the relationship between PPI sales and commission payments is applied across the industry, and potentially to sales of other financial products, then a "worst case scenario" could see the industry facing a much larger bill than anticipated, Autonomous Research said, the news agency reported.

"In essence this ruling appears to open up a new angle for PPI mis-selling claims, based on commission payment (as opposed to the PPI policy)," Autonomous Research said, according to Reuters.

"If applied to other products (e.g. store cards and auto finance), this case could lead to a whole new wave of consumer claims for the UK banks, with a bill which could be even higher than the current PPI tally," it said.

PPI was intended to cover repayments due on loans or credit cards for people who could not afford them due to an accident, unemployment, sickness or death. However, these products were widely mis-sold to customers who in some cases were not told that a policy was optional or that the policy they were sold did not cover their circumstances. As of January 2015, firms had handled over 14 million complaints about the sale of PPI and had upheld over 70% of them, paying out £17.3 billion in consumer compensation.

The recent ruling by the Supreme Court, known as the Plevin case, was on a personal loan taken out with payment protection insurance. The loan and insurance were both managed through a broker, which retained 71.8% of the premium paid by the client as a commission payment.

While the broker later settled a claim, the Supreme Court ruled that the insurer was also at fault and should have let the client know the size of the commission.

The UK's Financial Conduct Authority has said it is carrying out its own review of PPI complaints handling processes, and the impact of the Supreme Court's Plevin decision, and is due to announce the results and any changes needed to "secure appropriate protection for consumers" this summer.

Insurance expert Colin Read of Pinsent Masons, the law firm behind Out-Law.com, said: "It is many years since the vast majority of this type of PPI policies were sold and yet the number of complaints continues to dominate the workload of the FOS and many banks."



"The FCA's position on the Plevin case is keenly awaited and it has to be hoped provides greater certainty for everyone involved in PPI complaints," Read said.