Last checked at 
(Adds details, background)
LONDON, July 11 (Reuters) - Britain's banks are in theprocess of paying out 1.2 billion pounds ($2 billion) tocompensate small businesses that were mis-sold complex interestrate hedging products, data from the UK financial watchdogshowed on Friday.
The figure represents about a third of the 3.75 billionpounds set aside by Britain's four biggest banks - Barclays, HSBC, Lloyds Banking Group and RoyalBank of Scotland - to deal with the issue.
The Financial Conduct Authority (FCA) in May ordered banksto review almost 30,000 cases for possible mis-selling afterfinding "serious failings" in the way the products - known asswaps - were sold.
The swaps were sold on the basis that they would help toprotect smaller companies against the risk of rising interestrates. However, when rates fell customers had to pay largebills, typically running to tens of thousands of pounds.
Companies faced penalty charges if they wanted to get out ofthe deals, conditions that many businesses said they were nottold about when purchasing the products.
About a third of customers in the review had their casesdismissed because they were deemed sophisticated enough to haveunderstood the products. More than half of those left underreview were then offered alternative hedging products ratherthan full cash compensation.
By the end of June 16,000 customers had been sent decisionsabout redress, the FCA said on Friday. Of those, 13,500 wereoffered compensation with a cash element. So far 8,000 customershave accepted offers of compensation.
The regulator said last month that the nine banks involvedin the review had a met a 12-month deadline to look at allcases, though some banks still had to communicate all decisionsto customers. ($1 = 0.5877 British Pounds) (Reporting by Clare Hutchison; Editing by David Goodman)
