The British Bankers Association was unsuccessful in its bid to stop a crackdown on additional charges being mis-sold - and could be forced to pay out around Â£4.5 billion ($7.39 billion) as a result.
Hundreds of thousands of customers were sold PPI policies - aimed at helping to protect them should they default on a loan or similar arrears should they become ill or unemployed - even when such a claim would have proven almost impossible.
Creator of MoneySavingExpert.com Martin Lewis said: "It's a superb day for consumers. The banks have taken one hell of a whooping in the High Court."
The Daily Mail recently reported that Lloyds Banking Group, HSBC, Barclays, Santander and Royal Bank of Scotland/NatWest have been using customers' money to build up 'fighting funds' for added protection.
By Tony Aynsley