has had a worse impact on victims than mis-selling of payment protection insurance to individuals.
"The difference between this and PPI is that people lost their homes and businesses. These products were toxic."
The FSA said Barclays, HSBC, Lloyds and RBS will review sales of the products. Customers will be contacted by their banks and need not involve other advisers.
Banks are keen to keep claims management companies out of the process, having blamed them for inflating the cost of compensation for mis-sold PPI.
The British Bankers Association, a lobby group, said the FSA's announcement will give clarity to businesses and enable banks to get on with compensating customers.
"Any business which is currently facing financial distress and is seeking a suspension of payments should get in touch with their bank immediately," its Chief Executive Anthony Browne said.
The FSA has estimated that over 40,000 interest-rate swap products were sold to small firms.
Claire Gill, a partner at legal firm Carter-Ruck, raised concerns that the process could take too long to rescue businesses already struggling with repayments. She said it could take over a year for banks to deal with complaints.
"The priority for many businesses who are struggling financially will be to obtain a moratorium on payments, which is still being determined on a case-by-case basis," she said.
Business Secretary Vince Cable said banks' immediate priority must be to ensure no more small firms are driven out of business as a result of the mis-selling.
"This is an example of the little guy paying for the big banks' wrongdoing," Cable said.
Barclays said it had suspended swap payments for customers affected by the mis-selling who were in financial distress.
The FSA's study, launched last year after it had found "serious failings" in the way the products were sold, was set up to allow the regulator to assess the banks' proposals for reviewing sales and to ensure customers got the right outcome.
The FSA said on Thursday it had tweaked the criteria under which firms are entitled to claim to focus on small firms that were unlikely to understand the risks associated with the products.
Companies such as bed-and-breakfast businesses, which previously were