Banks agree payout for losses incurred over misleading rates hedges

Nine banks have agreed to pay £1.5 bn to cover losses linked to interest rate hedging products that were sold to private customers and retail clients since 2001. Many of the products were sold to small and medium enterprises on the understanding that they would hedge against interest rate movements on loans. When rates fell, however, some customers found themselves paying higher fees and facing large break costs to get out of contracts.