The Fair Trade Commission said small business customers of SMBC were told they could only receive loan extensions if they agreed to take the fixed side of interest rate swaps contracts as part of the package. Low interest rates meant the businesses ended up paying up to 200 basis points more than they would on a variable loan.
The FTC did not penalise SMBC, but ordered it to stop the sales and ensure the coercion did not occur again. "Several tens" of customers were coerced into buying swaps over the last four years, the FTC said.
SMBC has until December 12 to appeal against the decision.