Protection against a rise in interest rates might sound like a worthy insurance purchase to naïve banking customers but it might just be the UK’s next big banking scandal. The interest rate hedging products—known as swaps, caps or structured collars—had a catch: Borrowers could wind up paying more than expected if the Bank of England base rate fell significantly, which it did in the run-up to the credit crunch in 2008. Banks—including Barclays, HSBC, Lloyds and RBS—have been accused of not making clear the risks involved with the swaps. Some claim compensation could run into billions of pounds.

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