British banks have lost a court battle that could have a major impact on compensation claims for payment protection insurance misselling.
The High Court ruling means the Financial Services Authority will be allowed to demand that banks write to every customer who has bought PPI, an insurance policy sold alongside loans, to inform them that they have the right to complain if they suspect misselling.
The legal argument from the banks was that this was unfair as it effectively meant applying current tough laws against misselling to old cases where the policy was sold under looser rules.
However, the mailout itself isn't the most significant outcome of the case. Instead the conclusion of the legal battle should mean banks can no longer keep existing claims on hold by arguing that the situation was still legally uncertain.
The banks still have the right to appeal this specific court ruling within the next 21 days. However, it appears that regardless of what happens with the case, the FSA now has the power to demand existing claims are processed, with the threat of hefty fines or even a suspension of the bank's insurance business.