Regulator capped mis-selling payouts - This is what we are up against - lobbying power

The Treasury lobbied financial regulators to limit compensation for business victims of mis-selling by banks, the BBC has learned.

Andy Varity - Journalist who investigates corrupt banks

Thousands of business owners bought interest rate hedging products without understanding them.
Independent experts say banks could have been on the hook for £30bn of compensation, but so far only £1.9bn has been paid out.

The Treasury said it does not interfere with the independence of the regulator.

Watch Andy Verity's Newsnight report. https://www.youtube.com/watch?v=oIdqraQfXMU&feature=youtu.be

Draining cash

Businesses from small to large were sold more than 30,000 interest rate hedging products between 2003 and 2012.

Like payment protection insurance, they were sold when customers applied for a loan. Unlike payment protection insurance, banks often forced businesses to take them as a condition of the loan.

Business owners - many of them small businesses - were typically told the hedging products were a form of insurance that would pay out if interest rates rose, enabling them to manage their repayments.

What many were not told, however, was that if interest rates dropped, it would be the business, not the bank, that paid out.

If they then wanted to end the contract, the break costs were prohibitively high.

Continue reading: http://www.bbc.co.uk/news/business-33647312