Interest rate hedges include a variety of different products sold to customers to help protect them against interest rate risk. In principle, interest rate hedging products can meet customers’ needs, as they provide greater certainty over future loan repayments. However, these products can also be very complex and, therefore, susceptible to mis-selling. Our review has found serious failings in the sale of interest rate hedging products to small and medium sized businesses (SMEs). We have evidence which raises concerns about the sales we have reviewed in certain banks. These concerns include (i) inappropriate sales of more complex varieties of interest rate.
