There are 12 million PPI policies in force
A legal challenge to threatened limits on the sale of the controversial payment protection insurance (PPI) is being heard.
PPI is supposed to repay people's loans if they fall ill or become unemployed.
In January, the Competition Commission recommended that next year lenders be stopped selling PPI when granting a loan, or for seven days afterwards.
But Barclays bank lodged an appeal with the Competition Appeal's Tribunal (CAT) in March.
The consumers association Which? said Barclays should back off.
"PPI has been widely discredited, so it's important that it's sold separately from other financial products to help consumers make informed choices about how best to protect their finances," said Which? chief executive, Peter Vicary-Smith.
"Rather than appealing [against] the Competition Commission's decision, Barclays should concentrate its efforts on developing protection products that offer better cover and value for money to its customers," he added.
Barclays said it was only challenging part of the Commission's report.
"Barclays recognises the importance of appropriate financial protection and customer choice and provides a range of products to support customers in this area," said a bank spokeswoman.
"The main area of concern is the point of sale ban which, it is felt, is not justified by the evidence that has been provided," she added.
Judgement in the case is not expected until late in the year.
The Commission had said its restrictions on PPI sales should come into force by October 2010.
Its decision followed a two-year enquiry, which in turn had been prompted by a long series of complaints and criticism of PPI by consumer organisations and the Office of Fair Trading.
In May, the main City regulator, the Financial Services Authority (FSA), stepped up the pressure on the banks and other lenders who sell PPI as a profitable add-on, typically when granting personal loans, operating credit cards, or offering mortgages.
It instructed them immediately to stop selling one version, called single premium PPI, rather than wait for the Competition Commission's proposed deadline of October next year.
With this type of policy, the cost is added as a lump sum to the loan, which means borrowers end up paying interest on the insurance premium as well as the loan itself.
"We will be arguing our case vigorously," said a Commission spokesman.
Campaigners had long complained that the widespread and highly lucrative sale of PPI was little more than a "protection racket" organised by the banking industry to boost its profits.
They argued that many people had been mis-sold the insurance, either because they did not need it, or would not in fact be covered by the policies they were being sold.
This view was subsequently upheld by the FSA when it levied huge fines on some lenders.
The Commission found that the banking industry had been able to overcharge customers, and had made excess profits of £1.4bn in 2006 from selling PPI.
This was mainly because the lenders' point-of-sale advantage when selling the insurance meant there was little competition in the market, and little realistic opportunity for customers to shop around, leading to considerable overcharging.
Barclays wants to challenge the point-of-sale ban because it is too extreme, and says the Commission's analysis of the PPI market was wrong.
Barclays is being supported in its appeal by the Shop Direct group (which owns the Littlewoods catalogue business), and the largely state-owned Lloyds banking group.
The Commission is being supported by the FSA.