The Financial Services Authority (FSA) is set to reveal the results of its initial review into banks' alleged mis-selling of interest rate swaps to small businesses.
The Telegraph reports lenders are likely to come under pressure to agree a voluntary compensation scheme for victims.
It said a full investigation would take up to a year and would raise the prospect of banks being fined. Staff who have breached FSA rules could also face action.
The paper said its investigation had uncovered cases where small firms, such as chip shops, electrical sties and bed and breakfast's, had been sold the swaps despite not understanding how they operated.
The report said banks had denied mis-selling and claimed to have followed the rules on providing swaps.
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