The selling of interest rate swaps to Small and Medium Enterprises (SMEs), by the High Street banks, looks set to engulf those institutions just as they seem set to deal with the final froes of the PPI mis-selling pay outs.
It is now the interest rate hedging scandal that looms large. The final bill is set to be billions. Again, it is set to be a fair showing of our banks being driven by greed.
This time, the 'victims' are those at the very heart of small business in Britain. They are farmers, bar owners, restaurant bosses and it is estimated that there are thousands of them.
At a time when the country struggles to get up from its knees, the fact that so many of these businesses, the heart and soul of many a community and many of whom went bust, are preparing to fight to claw back the millions of pounds they have lost by this mis-selling makes it even more of a scandal.
But for many of the thousands of SMEs hit by the alleged mis-selling, they face a fight to even get the cases to court. The cost of taking on their bank is one which most cannot afford. It seems the only route open to them is litigation.
The Financial Ombudsman Service, their first port of call, have strict thresholds as to who can complain to them. They have also hinted that they won't take on cases worth more than £150,000.
The cases seem to be too vast, too expensive and too complex for many solicitors to act on a no-win, no-fee basis, so have been stacking up without action.
But ironically, the SME hedging cases appear to be lucrative for investors and funds willing to pump millions of pounds into funding the litigation in return for a slice of the eventual pay outs.
One company, Norton Accord, with links to litigation funding models for SMEs wrapped up in the scandal, has 30-plus SMEs ready to take on the banks and is working with seven different law firms.
There are estimated to be 4,000 'fundable' claims out there, with the average pay out being between £2million and £4million and the average length of litigation being between 12 and 18 months.
I know all about interest rate hedging as I sold structures when I worked in banking before I set up BENCHMARK Treasury Pricing. I wanted to enable SMEs to have independent advice and access to live market pricing.
Hedging is intrinsically a complicated bet against interest rates going up or down using derivative products. In recent years rates not only went down, but they almost fell through the floor.
Many clients who borrowed money from the bank - and this happens now more than ever - are forced to accept Interest Rate hedging as a condition of the loan.
The problem occurs in how banks sell the structures, the excessive profits made and the lack of ability to make an informed decision - you are relying on information provided by your bank. They state in the small print not to advise, they do not explain their profits or the potential cost in coming out of the hedge (should it be settled early).
I have found it is common practice to highlight the rewards of any given structure and not identify the risk. It is also common to put in place unnecessarily complicated structures, which generate more profit, where a simpler structure is more appropriate.
Bank salesmen are under intense pressure to hit ever increasing targets and hedging is very lucrative.
I believe that FSA rules and regulations surrounding banks being clear, fair and not mis-leading are not being met. I also believe that banks are not ensuring that their customers understand fully the products that are being sold to them. That is where SMEs have been mis-sold.
Hedging is and was a good theoretical principle, but the way they were sold by the banks, the profit based incentive, and the lack of ensuring clients understood what they were taking on has caused a further mis-selling scandal which could cost the banks - and the tax-payer - billions.