BBC News - Banks to begin small business hedge mis-selling review 31 January 2013 Last updated at 08:17 The big four High Street banks have been ordered to begin reviewing all interest rate hedging products they may have mis-sold to small businesses. The Financial Services Authority (FSA) said Barclays, Lloyds, HSBC and RBS would seek to identify and provide redress to all customers affected. The FSA's announcement follows its own review of 173 such sales last year, of which more than 90% broke regulations. The products were typically sold to "protect" borrowers from rising rates. In many cases, banks insisted that small business clients, such as care home providers, veterinary surgeons and pub landlords, had to take out the hedging products as a pre-condition for receiving a loan. Businesses that bought the products before the 2008 financial crisis were then unable to benefit from the Bank of England's decision to cut interest rates to a historically low 0.5%. Many found they could not terminate the arrangement without paying enormous fees to their lenders. In some cases, the product was for a larger amount or lasted many years longer than the loans they were supposed to be hedging. The FSA said that it hoped that five other lenders - Allied Irish Banks, Bank of Ireland, Clydesdale and Yorkshire, the Co-operative Bank and Santander - would launch their own reviews by 14 February. The banks will contact customers directly, and the FSA said there was no need for customers to engage a financial adviser. Poor practices The regulator said that of the sample of hedging products it had itself reviewed, a significant proportion would result in redress. However, it cautioned that its review had covered some of the more complex products sold and might therefore overstate the proportion of all products that were mis-sold. "Where redress is due, businesses will be put back into the position they should have been without the mis-sale," said Martin Wheatley, the designated chief executive of the Financial Conduct Authority, which is due to take over responsibilities from the FSA this year as part of a reorganisation of banking supervision in the UK. But it is important to remember that this review is firmly focused on the particular circumstances of each sale. These will determine whether there were failings in the sales process and, if so, whether redress is due. The FSA's review, concluded last summer, found a range of poor practices including: lack of clarity about the costs of stopping a product failure to check whether a customer understood the risk selling based on personal rewards rather than on the businesses needs.