The big four banks will start a review into the sale of complex interest rate hedging products that might have been mis-sold to small businesses.
The Financial Services Authority, which last said it had found serious failings in the sale of interest rate hedging products (IRHPs), said Barclays, Lloyds, HSBC and RBS would review individual sales and provide redress as necessary.
The watchdog said this morning that in the 173 test cases examined, more than 90 per cent broke regulations, with a “significant proportion” of these cases likely to result in compensation.
While the products were supposed to protect firms against rising interest rates, they left them facing huge bills when rates fell. Firms also faced hefty penalties to get out of the deals, which many said they were not told about.
"Small businesses will now see the result of the review as the banks look at their individual cases. Where redress is due, businesses will be put back into the position they should have been without the mis-sale," said Martin Wheatley, chief executive designate of the Financial Conduct Authority.