LONDON: Britain’s financial watchdog was accused in London’s High Court on Tuesday of unlawfully failing to help thousands of people excluded from a 2.2 billion-pound ($2.8 billion) bank redress scheme relating to interest rate hedging products.

The Financial Conduct Authority (FCA) faces legal action over its response to an independent review of the scheme, under which nine banks – including Barclays, HSBC and Lloyds – agreed to pay compensation.

Lawyers representing Britain’s All-Party Parliamentary Group on Fair Business Banking say thousands were excluded from the scheme agreed by the FCA’s predecessor in 2013, and many had their businesses and livelihoods destroyed as a result.

Banks sold the products, which were designed as a protection against rising interest rates, to thousands of small businesses. But when rates fell after the global financial crisis, customers had to pay extra charges of up to tens of thousands of pounds.