TENS of thousands of bank customers are in line for big payouts after becoming victims of a payment protection insurance scandal.
Customers wrongly sold policies may receive up to €3,000 each -- though taxpayers will foot much of the bill since four of the banks have already been bailed out by the State.
Policies were sold to people -- including the self-employed -- who could never make a claim because of the terms and conditions.
Payment protection repays loans, mortgage or credit card in the event of job loss, accidents, or death. Customers getting car loans and credit cards were often pressured into taking out the policies.
The Central Bank has ordered the banks to find out how many payment protection insurance policies were wrongly sold.
AIB, Permanent TSB, EBS, Bank of Ireland, Ulster Bank and subprime lender GE Money have been ordered to contact those they sold the policies to.
Experts are concerned at the extent of the problem, as approximately 300,000 payment protection policies were sold between 2008 and 2011 alone.
The cost of compensating customers could run to €600m.
The Central Bank has also warned it is considering taking legal action against some unnamed firms that it feels broke the rules when selling protection insurance.
Payment protection is separate to mortgage protection insurance, which lenders insist homeowners must take out.
The self-employed, homemakers and part-time workers are barred under the contracts of the insurance from making a claim.
Director of consumer protection in the Central Bank, Bernard Sheridan, said the banks and other firms that sold protection insurance will write to customers in the coming weeks explaining how they will handle their probe of the issue.
"The Central Bank is requiring the firms to take an orderly, co-ordinated and consistent approach to their reviews and we will continue to monitor them closely."
Mr Sheridan said customers do not need to do anything at present. They will be contacted by the firm that sold them protection insurance. The National Consumer Agency said there was no need to engage a solicitor or a claims agency.