At least €25 million is to be refunded to customers who were mis-sold Payment Protection Insurance (PPI). A review has found that 1-in-5 were mis-sold to consumers.

The Central Bank says 350,000 policies were taken out since July 2007 of which over half have so far been examined.

PPI is designed to cover repayments on a loan for a period of time, if the policyholder suffers an accident, becomes ill or loses their job.

The Central Bank is currently investigating the sale of the policies after it emerged some were mis-sold to consumers who did not require a PPI, or who did not meet the criteria to avail of the cover.

11 lenders - AIB, Bank of Ireland, Bank of Scotland, Danske Bank, EBS, GE Money, KBC Bank, MBNA, Permanent TSB, RaboDirect Bank and Ulster Bank - are carrying out reviews as part of the process.

The Central Bank has ordered the lenders to complete the remaining PPI reviews by the end of the year.

The bank says the aim of the review is to provide a straight-forward mechanism for redress without any cost to the consumer which should eliminate the need to engage third parties or go through a legal process.

Bernard Sheridan is the Director of Consumer Protection with the Central Bank.