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Interest-rate swaps: Banks face small business fightback

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image captionThe complaints are not about the loans themselves but rather the "hedges" that came with them

The banks are in hot water again.

Major High Street lenders have been selling complex financial contracts to small business clients without properly explaining the risks involved.

The products were offered to thousands of small firms - including pub owners, haulage firms, care-home operators and vets - when they asked their bank to take out a loan.

The borrowers were told that the product would provide an "insurance" or "hedge" against the risk of interest rates rising.

But with interest rates having instead fallen since 2008 to historic lows, many of these businesses have discovered they are now sitting on tens of thousands of pounds in losses.

More on this story

  • Barclays investigated by FSA for swap mis-selling claim

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