The FSA is reviewing the sale of interest rate swaps in the wake of claims they were missold.
The swaps are designed so banks cover the cost of increased payments in the event of interest rate rises while if rates fall, the customer has to pay the bank. Many of the products were sold between 2006 and 2008.
Lawyers who have taken on cases of alleged misselling of the swaps told 40 MPs at a meeting last week that clients were not warned that if rates fell they would face penalties.
Treasury financial secretary Mark Hoban confirmed the review is taking place in a response to a parliamentary question from Labour MP Jim Cunningham.
He says: “The FSA is currently carrying out a review of this issue. As part of this, the FSA are considering additional information from the small businesses that purchased these products, to help them better quantify the size of the issue and to establish whether any banks have failed to comply with their obligations under the FSA conduct of business sourcebook.”
An FSA spokesman says: “The work we are doing at the moment is to find out more about the products sold, how they were sold, and whether they met customers’ needs. We have already received some detailed information from banks in connection with their sales of interest rate swaps which we are considering and we have also spoken to a number of customers who have been affected. If we find widespread evidence of breaches or misselling we will take appropriate action.”
Last week, Money Marketing revealed the MPs involved in last week’s meeting have written to the Treasury select committee asking it to launch an inquiry into the issue. They also agreed to table a request for a backbench business debate.