Greg Clark, financial secretary to the Treasury, has told the Financial Services Authority (FSA) that banks must allow firms’ mis-sold the swaps to stop making premium payments.
The FSA recently said 90% of interest rate hedging products were likely to have been mis-sold to SMEs.
The Telegraph reports the minister stopped short of calling for a complete ban on payments, but is understood to have privately told the FSA that its findings were a “game changer”.
Barclays, Lloyds Banking Group, Royal Bank of Scotland and HSBC have agreed to suspend payments on a “case by case basis” for customers who can prove financial distress.
This comes as the FSA faces legal action overs its compensation scheme, announced last month.
The report said law firm Manches is about to launch a judicial review against the FSA. Manches claims it “acted unreasonably in establishing and changing the criteria for businesses to be within the review”.
