Seven more banks review rate swaps as problem looks widespread

Seven more banks, including Clydesdale and Santander, have agreed to take part in the Financial Services Authority's (FSA's) scheme that's designed to untangle the mess created by some banks when firms signed up to policies known as "interest rate swaps."

They were designed to protect companies from significant hikes in the cost of loans or mortgages if interest rates went up.

But, with interest rates at rock bottom for so long, for many companies the opposite happened. The spiralling cost of "swaps" has even forced some companies out of business.

After a preliminary investigation the City regulator, the FSA, found there were "serious failings" in the way these products were sold, and announced a scheme with several of the big banks including RBS and Barclays to provide redress to those affected.

With seven more banks now signing up it suggests the problem was widespread.

But some firms have already made clear they still intend to take legal action.

The voluntary scheme may not keep the banks out of court.

This is the statement from the FSA:

Clive Adamson, director of supervision in the Conduct Business Unit, said: