Seven banks including the Clydesdale will review their sales of interest rate swap agreements (IRSAs) and if necessary compensate customers in the same way as the big four banks, the Financial Services Authority (FSA) said yesterday.

However, the regulator failed to allay the concerns of campaigners that the IRSA review process will be controlled by the banks, and could yet force small businesses to take legal action.

Welsh MP Guto Bebb, on behalf of MPs and the Bully Banks campaign, has called on the FSA to clarify that mis-selling occurred where the bank made an IRSA a condition of a loan, over-sold a hedge in relation to the loan, failed to identify its derivatives expert as a salesperson, or failed to disclose commissions, ongoing costs, or breakage fees.

But the FSA's new factsheet says each bank will create its own review criteria, approved beforehand by the FSA and checked afterwards by an independent reviewer. The customer will have "a right to have an independent reviewer present during any meetings or calls with the bank".

Cat McLean, partner at MBM Commercial in Edinburgh which is advising firms on IRSA cases, commented: "The process still seems remarkably opaque. It still looks as if it is leaving control of the process of assessment largely with the banks. It isn't really clear what the role of the independent reviewer is."

Simon Gracechurch at English consortium QA Legal, where Edinburgh QC Iain Mitchell is among the barristers, commented: "The problem is mostly that the banks don't understand the full extent of what constitutes a mis-sale.

"Also, the bank's expectations are very different from SMEs when it comes to redress."

He said some businesses which had been sold the most complex "structured collar" version, the only group entitled to automatic redress, were being offered "the difference between the rate paid on a structured collar of 5.75% and on a fixed rate loan of 5.25%, which turns out to be not much money at all – the SME's viewpoint is they didn't want a fixed rate at all".

Mr Gracechurch said redress would be too low, and probably offered as a reduction on a loan balance, while the reviewer would not be trusted to understand issues such as consequential losses. He said: "I think that most SMEs will end up going down the legal route."

The FSA said the Clydesdale/Yorkshire, Cooperative, Santander, Northern, Bank of Ireland and Allied Irish banks had now agreed to review their sales, which amounted to under 10% of total IRSA sales. The regulator said it had not examined any of these banks' sales.

The Herald revealed last month that IRSA mis-selling, which sparked protests at the RBS annual meeting, could have cost UK businesses up to £10bn, and that over 50 businesses had been in contact to allege mis-selling. They included customers of the Clydesdale, which was outside the initial review.

Now a Glasgow businessman, who does not want to be identified, has said he is coordinating a support group for Clydesdale and Yorkshire bank customers whose business loans had "embedded IRSAs without the knowledge of the SMEs".

A Clydesdale Bank spokesman said: "We're confident we have a robust and well-established process that ensures all regulatory requirements are adhered to when selling interest rate derivative products."