The policies were meant to protect companies from interest rate increases -to stop the cost of loans spiralling out of control.
But as interest rates fell and then stuck at rock bottom levels, the opposite happened and thousands were stuck with costs they could not deal with.
Barclays, HSBC, Lloyds and Royal Bank of Scotland agreed with the Financial Services Authority (FSA) to compensate customers where the mis-selling of interest rate swap arrangements (IRSAs) had occurred.
As well as offering redress directly for those customers that bought the most complex products, the banks have also agreed to stop marketing certain swaps products to retail customers.
The FSA said not all businesses will be owed redress, but for those that are, the exact redress will vary from customer to customer.