FSA extends mis-selling probe to seven more banks
Seven more banks have volunteered to join the Financial Services Authority’s review into the sales of interest rate hedging products to small and medium sized businesses, the watchdog has announced.
Allied Irish Bank UK, Bank of Ireland, Clydesdale and Yorkshire banks, Co-operative Bank, Northern Bank and Santander UK have confirmed they will take part in the review of their sales of such products and the redress exercise, on the same basis as the larger banks which previously signed the agreement.
In June the FSA announced that it has found “serious failings” in the sale of interest rate hedging products to some SMEs and that Barclays, HSBC, Lloyds and Royal Bank of Scotland had agreed to join the scheme and provide appropriate redress to clients.
The regulator said that during the period 2001 to date, banks sold around 28,000 interest rate protection products to customers, many of which were small and medium-sized businesses.
These newest banks to step forward account for about 10 per cent of overall interest rate hedging product sales in the UK.
Although the FSA has not alleged any mis-selling on the part of these banks, by partaking in the review they aim to ensure customers who bought these products have been treated fairly.
As the number of banks taking part in the review reaches 11, the regulator has agreed terms with the four largest banks, including giving each customer the right to have an independent reviewer present during any meetings or calls with the bank.
The FSA said the scheme will see banks provide redress directly for those consumers that bought the most complex products. The banks have also agreed to stop marketing interest rate structured collars to retail customers, according to the regulator.
Clive Adamson, director of supervision in the FSA’s conduct business unit, said: “This is a major exercise but one that we hope will ensure even more businesses benefit from having their individual situation reviewed.”