Palmer - nicknamed "Goldfinger" - is currently serving an eight-year prison sentence for his part in an estimated �30m timeshare fraud.

This latest attempt to recover compensation could be one of Britain's biggest-ever legal actions.

This action is being entirely driven by the desire to get Palmer's victims fair recompense for the losses they sustained

Sandy Grey, chairman TCA

Following his conviction at the Old Bailey last year, a court ordered that �33.2m of Palmer's assets be confiscated.

That award was overturned at the Court of Appeal and he was then ordered to pay �2.3m in compensation to individuals.

Compensation has now been awarded to about 400 of Palmer's victims, according to the law firm Irwin Mitchell.

The firm is launching this latest attempt with the Timeshare Consumers Association (TCA), based in Nottinghamshire, on behalf of a further 16,000 people defrauded by Palmer.

TCA chairman Sandy Grey said he thought there was a fair chance of success.

Elderly victims

"This action is being entirely driven by the desire to get Palmer's victims fair recompense for the losses they sustained," he said.

Peter Wylde, a partner at Irwin Mitchell in the City of London, said: "Irwin Mitchell is highly experienced at managing group actions and this looks set to be one of the biggest ever.

"As Palmer's assets are known and we are gathering information on all 16,000 victims, we aim to ensure everyone who joins the group is properly compensated."

Palmer, who comes from Battlesfield, near Bath, Somerset, was one of Britain's richest men with wealth estimated at �47m.

Palmer's assets were estimated at �47m

He was acquitted of handling proceeds from the �26m Brink's-Mat bullion robbery at Heathrow in 1983.

Palmer built up a multi-million pound timeshare business in Tenerife.

But he was convicted by a jury - who considered their verdict for 24 days - of conning thousands of Britons out of their savings.

Many of his victims were elderly couples.

A third company, Forensic Risk Alliance is currently helping to compile a database of people who feel they have a claim against Palmer.

So far, nearly 250 people have registered their interest in joining the action.