This blog post continues our expert analysis of complex investments and their regulation.
The Telegraph is reporting on a story I have been following for some time. (Telegraph) Many UK banks sold complex interest rate swaps to small businesses to protect from rising interest rates. However, when rates continued to fall, the businesses were required to post more and more collateral forcing many into bankruptcy.
Money quote:
Martin Wheatley, chief executive designate of the Financial Conduct Authority, accused lenders of selling businesses “absurdly complex products” and said many customers could now expect compensation from their banks.