UK watchdog says rate swaps compensation totals 1.5 mln stg

LONDON, Oct 4 (Reuters) - Britain's markets watchdog said onFriday banks have so far paid out 1.5 million pounds ($2.4million) compensating small businesses mis-sold complex interestrate hedging products.

The products were designed to protect smaller companiesagainst rising interest rates, but when rates fell, they had topay large bills, typically running to tens of thousands ofpounds. Companies also faced penalties to get out of the deals,which many said they had not been told about.

The Financial Conduct Authority said last month that, by theend of August 10, offers of redress totalling 500,000 pounds hadbeen accepted by businesses.