The banking industry and the Financial Services Authority (FSA) are in talks to set a deadline for customers being able to make claims for the mis-selling of payment protection insurance (PPI).
Industry sources confirmed to The Times that the British Bankers' Association has suggested the deadline be set for next summer, in return for the banks financing a widespread advertising campaign to ensure the public is aware of an end date for claims.
The FSA is said to be sympathetic to the banks' concerns that there will be no end to the number of PPI mis-selling claims, the paper reported. However, the banks and regulators will keep the need for consumers to get a fair deal as central to any solution.
The talks are said to be in the early stages but a number of options as to how the deadline could be implemented have been put forward already.
In one, the FSA would have to consult on new claims rules, but it is unclear at this stage whether that would require legislation.
In another, new regulations would mirror existing claims rules, which stipulate that people mis-sold a product have six years to lodge a complaint, but if consumers become aware of mis-selling only after this period has ended they will be given a further three years to lodge a complaint. The Times said it understood that an advertising campaign could act as a trigger for the three-year deadline.
An FSA spokesman said to The Times: "As you would expect for an issue of this scale and complexity, we have considered a number of options and continue to do so. PPI is an ongoing and high-profile issue and we are monitoring it closely."
The latest estimates show that the total cost to banks for mis-selling PPI is likely to come to £25 billion, almost double the near-£13 billion banks have already put aside.
Last week Britian's Financial Ombudsman Service - which deals with cases when banks and their customers cannot agree a settlement - said it expected to see a 42pc rise in new claims in the current financial year, driven by an unprecented number of PPI cases, which had "dramatically exceeded" their assumptions.
In its latest consultation paper , it said consumers were currently referring more than 5,000 new PPI cases to the FOS each week, and it expects to receive around 250,000 new cases by the end of the current financial year (2012/2013) against a planning assumption of 165,000 cases.
This has led to the Ombudsman adding around 1,000 more staff to deal with the increased volumes.
Britain's biggest banks have already set aside over £12bn to compensate customers. Lloyds, which has the most customers of any UK bank, has earmarked £5.3bn for claims.
The BBA declined to comment.
• What's your story? Email us at firstname.lastname@example.org