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She said: “I haven’t lost a vast amount of money but I had no idea I was paying it until I took a close look at my statement. As I’m self-employed I would be unlikely to be able to claim on it so it was money down the drain.”

Despite Green’s surprise, Littlewoods said that customers had to opt for PPI and that it was not automatically added to an account.

But millions are believed to have had cover forced on them by high-pressure salesmen. Douglas Wilson from Enfield was sold a policy when he took out a mortgage with Loans.co.uk. But it proved useless when he had to give up work to care for his disabled wife and his case was turned down.

You may be able to claim compensation if a firm was not open about adding insurance to a loan, if you were told that you would not get a loan if you did not take out the cover, or if the sale was unsuitable because your circumstances mean it would not pay out.

You may also have a claim if your provider is making it hard to get out of your PPI deal. Rather than charging a separate amount each month for cover, some firms lump it in with the loan in a single premium. They then claim that it will be impossible to provide a refund if you pay off the loan early.

Experts warn that some firms will try their hardest to deny customers redress, but it is still worth fighting. Ian Allison at Conkers, a claims firm, said: “I have no doubt that some firms will try to wriggle out of paying claims. Firms tried to do exactly the same thing with endowment mis-selling and it was only when customers fought that they backed down.”

If you think you have grounds for complaint, you must first write to the firm that sold the policy. If it does not offer redress, you should try the Financial Ombudsman Service, which can force firms to pay compensation.

Consumers who have been sold PPI by insurance brokers or advisers since January 2005 are fully covered by the ombudsman (financial-ombudsman.org.uk). You can also complain to the ombudsman about policies sold by banks or building societies before that date. But other consumers are unlikely to be able to fall back on the scheme. Without the threat of censure by the official body, advisers fear some firms may be quick to reject complaints. Last week’s action against GE follows previous fines for poor selling practices for home-shopping firm Redcats and lenders Loans.co.uk and Regency.

GE provides store cards for dozens of retailers, and offers PPI policies to insure customers in the event that they are unable to pay card bills. In 2005 more than 850,000 policies including PPI were sold on its behalf, usually at the tills by shop assistants.

The FSA has asked GE Capital to write to people who were sold the insurance and pay compensation if it is deemed they were inappropriately sold PPI.

Margaret Cole, director of enforcement at the regulator, said: “We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

An Office of Fair Trading (OFT) decision to refer the market to the Competition Commission is also expected in the next two months. Its preliminary investigations uncovered problems such as firms automatically including PPI when they give potential customers a quote, ramping up the cost.

Many people buy PPI from the firm selling them their loan, but stand-alone products are often cheaper. The OFT uncovered a £156-a-year difference between the cost of the cheapest and most expensive insurance on a 20-year £100,000 mortgage. It estimates that consumers could save £1 billion a year by seeking out the most competitive quote.

But advisers question whether consumers need the insurance at all. Most policies do not pay out for the first 30 days and some exclude claims for the first three months. As many people find a new job in the first month, PPI proves to be totally useless.

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