A spokeswoman says customers are not required to take out PPI when taking out a personal loan. Further, it says prior to completing the loan "customers are provided with a printed summary of cover and a legal agreement which separates the cost of the loan and PPI to show the customer the different elements of their monthly repayments".

It says: "Our customer satisfaction survey conducted in October 2003 revealed that 92% of customers were happy with the information provided to them at point of offer."

The documents seen by Jobs & Money reveal that Barclays has an 18% share of what it calls the "creditor insurance" market. If Barclays' profitability on PPI policies is repeated across the banking industry - and there is little evidence that the other banks are charging much less - then UK consumers are handing the banks excess profits running into billions on this one product alone.

PPI is designed to protect a borrower's ability to maintain repayments on unsecured personal loans, mortgages and credit cards, if they fall ill or are made unemployed. On an unsecured loan of £5,000, repayable over five years, someone opting for payment protection can easily pay £2,000 more than someone who resisted the pressure. In some cases, repayments on the personal loan insurance premium can be nearly as twice as expensive as the interest on the personal loan.

No-one is legally obliged to add payment protection, but according to reports from independent brokers, a range of tactics are used to make the purchaser feel duty-bound to take it out. Customers are frequently given repayment quotes without being told that the figure includes personal loan insurance.

The documents seen by Jobs & Money show that Barclays set a target for 70% of all its loans to be accompanied by personal loan insurance, with staff strongly incentivised to meet the target.

The actual percentage of Barclayloan customers taking payment protection ranged between 60% and 70%, on mortgages 36% and on credit cards 20%.

Another issue is whether buyers are told it is optional. Conditional selling of protection insurance - in which the offer of a loan is tied to the person also taking out insurance - has effectively been banned by regulators. But there are persistent claims that it remains commonplace.

Maria Stengard-Green says the counter clerk at Barclays told her quite clearly that, because she was taking out a personal loan of £15,000, she had to have the personal loan insurance, which eventually cost £7,000.

But Barclays denies it was compulsory, adding that she was sent a summary of her cover, which would have enabled her to take the loan without personal loan insurance if she wished. Jobs & Money has also seen material showing how management at Barclays itself was so concerned about lack of training of staff, and sales practices which verged on the conditional - tantamount to "No PPI, No loan" - that in 2000 it sent 1,800 staff on a PPI training course.

One way in which a bank earns extra profits on PPI is that, although the "protected price" of a loan is quoted in monthly terms in brochures, it asks the borrower to pay the premium as an upfront fee. The borrower then pays interest not just on the capital borrowed, but on the personal loan insurance premium, as well. In Barclayloan's case, this rate can be anything from 7.4% to more than 20% a year.

Another profit source is the money to be made when someone pays off their personal loan early, which is the case in around two-thirds of unsecured personal loans.

Under the "rule of 78" used by many lenders, the way the personal loan insurance is refunded tends to favour the lender. This often results in a large outstanding balance, even after the customer has paid large amounts of interest.

Many customers fail to realise that payment protection can be easily purchased independently as a stand-alone product over the internet, or from brokers at between a third and a half of the cost charged by most high street banks. However, Barclays and other banks which sell PPI argue that their cover is more extensive.

Unsurprisingly, given its importance to banks such as Barclays, the industry has gone to some lengths to counter any negative publicity. In September 1999 this lead to the setting up of Protect, a trade association of 19 organisations with PPI interests, including the UK's top 10 creditor insurance companies.

As well as Barclays, members include Lloyds TSB and Legal & General. The group, which has no permanent staff, meets at hotels, clubs and golf clubs. Documents seen by Jobs & Money reveal it internally accepted that its arguments were, in many cases, unconvincing and that it needed help from members to construct a better case for the product and its profit margins.

Despite the large profits Barclays has made on PPI business conducted almost wholly in the UK, it has legally avoided paying tax by setting up companies in Dublin and the Isle of Man.

Two were set up in 1997 in the Republic of Ireland - Barclays Insurance (Dublin) Limited (BIDL) and Barclays Assurance (Dublin) (BADL). They make up Barclays Insurance Dublin (or BID) with the specific purpose of underwriting PPI policies to UK customers.

What has never been disclosed before is the way that PPI through (BID) Barclays Insurance Dublin, has contributed to the profits of the whole group. This comes in two ways. The first is payment of commission to Barclays from each of the two constituent companies. In 2000, for example, this amounted to £88m. The second comes from underwriting profits on Barclays' PPI insurance. In 2000 this came to £153m.

According to evidence seen by Jobs & Money, basing its creditor insurance business in Ireland, was Barclays' response to the threat of the press nosing around what it itself called historically high profits and commissions earned through selling PPI.

The other reason was to take advantage of the lower 10% rate of corporation tax, a saving to the parent company of around £30m a year.

A Barclays spokeswoman says: "Tax and regulatory issues, as well as operational issues, always play a part in deciding upon location. The appropriate local tax is paid in Ireland, the same as all our other subsidiaries pay local tax. UK tax is paid on some of the profits generated from PPI activities."

Other companies set up in Ireland include HSBC, and Halifax Insurance.

There are wider concerns about whether PPI policies are necessary at all. According to a November 2002 household survey commissioned by the DTI "very few payment protection policyholders (4%) had tried to claim in the past 12 months, and 3% said they had done so successfully." Across the industry, around 25% of claims are turned down.

"Rather than paying out based on the slight possibility of needing to claim, it may be better to keep the money and reduce your debts," says Simon Burgess, managing director of insurance brokers Goodfellows.

Regulatory action may now follow Jobs & Money's disclosures. In December 2003, the Treasury Select Committee's recommendation in its First Report on the Transparency of Credit Card Charges, asked the Office of Fair Trading to investigate "how PPI is priced and whether the market may benefit from increased competition".

But In a statement released earlier this week, the OFT said that they had "so far decided against investigating this market more generally".

However, Mr Lamb said he was "not convinced by their reasoning", and did not preclude the possibility of recalling witnesses to appear before the Select Committee.

The Irish accounts also throw cold water on the industry's claim that they need to build up reserves to pay policyholders in the bad times. The accounts show that relatively small amounts of profits are retained within the Irish companies. In fact, insiders regards the industry as extremely stable, with any bad news easily spotted one to two years ahead. It is also acknowledged that apart from one year in the early 1990s, PPI has been unremittingly profitable.