Clydesdale Bank is standing firm in its refusal to review the fixed rate "embedded swap" loans which have prompted a slew of complaints about mis-selling and hidden liabilities.

Following a promise in the Commons to Dundee West MP Jim McGovern, by financial secretary Greg Clark, that a Tayside constituent's fixed rate tailored business loan (TBL) would be included in the regulatory review under way by the Financial Conduct Authority, the Treasury has now effectively admitted that was a mistake.

Clydesdale said yesterday: "We understand that HM Treasury have confirmed to Mr McGovern that no fixed rate TBLs are part of Clydesdale Bank's review and why. Any customer with a fixed rate TBL is able to use the bank's normal complaints procedure, which Mr McGovern's constituent is doing."

A bank spokesman added: "We have been very clear from the outset about what we will review, and that fixed rate TBLs are not within the scope of this."

Clydesdale and Yorkshire Bank last month increased their provisions for swap loan mis-selling by a modest £15m.

Mr Clark has so far declined to explain his statement, and a parliamentary debate on swap loan mis-selling last week was fielded not by financial secretary Mr Clark but economic secretary Sajid Javid.

Mr McGovern said: "It seems clear to me that there is a consensus of expert opinion that mis-selling of these products did take place. The impact this is having on my constituent and others is severe, threatening their business and personal finances and causing health problems. I have sent this information on to the Treasury, and I hope that they decide to start siding with the victims rather than the bank who have caused this damage."

The all-party group of MPs on swap mis-selling is pressing the Treasury to amend the law so the embedded swap loans, which the FCA says are unregulated, can be included in its review.

The campaign gained traction this week when the hard-hitting Parliamentary Commission on Banking Standards included the issue in its recommendations. It said: "The interest rate swap scandal has cost small businesses dear. Many had no concept of the instrument they were being pressured to buy. This applies to embedded swaps as much as standalone products."

If the regulators were powerless, "then it is for the government and parliament to ensure that the regulators have the powers they need to enable restitution to be made for this egregious mis-selling".

Cat McLean, solicitor at MBM Commercial in Edinburgh, commented: "It is really disappointing that Clydesdale refuse to recognise the inherent unfairness in the exclusion of TBLs from the review process."