Banks face '£1.5 billion payout'

The UK's four big banks - Barclays, HSBC, Lloyds and RBS, have agreed to start work on reviewing individual sales and providing compensation, after City watchdog the FSA found a significant proportion of interest rate swaps were mis-sold to small businesses.

Read: What are interest rate 'swaps'?

The cost of compensating businesses could total as much as £1.5 billion across the sector.

Barclays, HSBC and Royal Bank of Scotland have already set aside around £360 million to cover potential claims.

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Banks face mis-selling payouts

Britain's scandal-hit banking industry was facing another hefty compensation bill after a review of complex products sold to small businesses found more than 90% had been mis-sold.