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Interest rate swap mis-selling

Some of Britain’s biggest banks will have to pay compensation to small businesses which were mis-sold complicated insurance to protect loans against rises in interest rates.

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The Financial Services Authority (FSA) confirmed on Friday, 29 June 2012 that some of Britain's biggest banks will have to pay compensation to small businesses which were mis-sold complicated insurance to protect loans against rises in interest rates. So-called interest rate swap arrangements (IRSAs) fall broadly into four categories: Swaps – enabling the customer to 'fix' their interest rate; Caps – placing a limit on any interest rate rises; Collars – enabling the customer to limit interest rate fluctuations to within a simple range; and Structured collars – enabling a customer to limit interest rate fluctuations to within a specified range, but involves arrangements where, if the reference interest rate falls below the bottom of the range, the interest rate payable by the customer may increase above the bottom of the range. Four of the UK's 'big five' banks – Barclays, HSBC, Lloyds and the Royal Bank of Scotland – have agreed to compensate customers who were mis-sold structured collars, and will review their sales of the other three types of product. If you're not sure whether this applies to you, find out more on the FSA's website and read their interest rates swaps fact sheet. We're already supporting some of our members who believe they were mis-sold one of these products, through representation at high national levels within the banks. If you were mis-sold one of these products and would also like our help, call our helpline today on 0845 130 1722 or email us at helpline@fpb.org.

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