Payment protection insurance (PPI) is expected to be among the first "mis-selling scandals" of the FSA regime, law firm Reynolds Porter Chamberlain (RPC) has warned.
Speaking at an RPC workshop, solicitor Mark Sutton said PPI exclusion clauses outweighed the terms of cover, making "the prospect of a pay-out slim."
Sutton said lenders are estimated to have earned more than £6bn from PPI since 2000, with a quarter of claims rejected.
"There are policies being sold to consumers which are unsuitable," he claimed.
The FSA is expected to turn its attention to the mis-selling of PPI "within months".
It has highlighted a list of concerns including the use of aggressive sales practices, poor values products, excessive profit margins and unsuitable products.
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