A court ruling could result in banks paying up to £18bn in compensation to customers missold payment protection insurance.
The Financial Times reports on a Manchester County Court hearing in June where the judge decided a couple was entitled to get all of the 76 per cent commission they paid back in compensation.
The FCA said last year that commissions of more than 50 per cent were unfair and that anything over that point should be paid back to consumers by the banks.
According to the FT, lawyers say the Manchester County Court ruling could set a precedent and lead to thousands of claims for full compensation.
In the case, the couple said they were not told about the size of the commission that was paid to Paragon Personal Finance, owned by Paragon Bank.
Paragon received commission of nearly £8,000, or 76 per cent of the PPI commission.
Judge Pearson said the couple would not have taken the policy if they had known the level of commission.
As a result, Paragon must pay the full PPI premium and accrued interest, not just the 26 per cent it would have paid under the FCA guidance.
According to the FT, commercial barrister at St John’s Buildings in Manchester Elis Gomer says if the case becomes precedent customers could get an extra £18bn.