The banking industry has abandoned its legal fight over the mis-selling of payment protection insurance, paving the way for thousands of customers who were mis-sold the policies to receive compensation.
A PPI policy is designed to cover loan repayments if someone falls ill, has an accident or loses their job.
However, many policies were mis-sold to consumers, some of whom did not even realise they were being sold PPI.
The British Bankers' Association (BBA) said it will not appeal after it lost its High Court challenge against new FSA rules on mis-selling PPI being applied retrospectively.
The move comes after Britain's biggest retail bank, Lloyds Banking Group, last week said it was pulling out of any further legal action and setting aside £3.2bn to compensate customers.
Barclays also announced that it will pull out of the legal fight and said it will begin to process complaints from customers which were previously on hold.
HSBC, which stopped selling the policies in 2007, has made a provision of $440m (£269m).
Taxpayer-backed Royal Bank of Scotland, which owns Ulster Bank, also confirmed that it would not be pursuing further legal action, although it has yet to put a figure on how much compensation it is likely to have to pay out.
Unofficial estimates, based on the group's market share, put the final possible figure at around £1bn.
A number of other banks are also likely to face significant bills, as will stand-alone credit card and loan providers and some insurers.
It is currently unclear exactly how many consumers will be affected, with the FSA previously estimating that around 3m people were mis-sold the policies, with compensation likely to total £4.5bn.
But the regulator's redress figure now looks far too conservative, suggesting the number of people affected may also be considerably higher.
What does look certain is that PPI is set to become the biggest mis-selling scandal the UK has ever seen, with final payouts likely to dwarf the £4.5bn paid out to people who were wrongly sold personal pensions and the £2.7bn paid out to victims of endowment mis-selling.
Yesterday's move means firms must now start processing claims for people who think they were mis-sold PPI, which had been put on hold while the legal action was ongoing.
Groups must also pro-actively contact customers and alert them to the fact that they may be entitled to compensation if they identify a pattern of mis-selling.