A High Court judge is due to make his decision on Wednesday in a challenge over new regulations to control how payment protection insurance (PPI) is sold to borrowers.
Mr Justice Ouseley will give his ruling in an action brought by the British Bankers' Association against the Financial Ombudsman Service and Financial Services Authority (FSA) over guidance introduced in December.
A hearing in London in January was told that the regulations could cost the industry around £4.5 billion.
The new regulations are designed to ensure customers receive fair treatment whether they are buying PPI or complaining about being mis-sold cover.
Lord Pannick, QC, representing the association, said the FSA's estimated implementation of the plans could lead to £3.2 billion costs based on a 20% take-up by those who have bought PPI policies since 2005.
He said: "If that assumption is an underestimate of the response rate, the costs are going substantially to increase."
The FSA estimates PPI providers will have to pay out up to £1.3 billion in compensation for new complaints received during the coming five years.
Lord Pannick said this could lead to 35 insurance companies failing with the resulting refunds to borrowers falling on the Financial Services Compensation Scheme.