The director of Staffordshire-based Needanadviser.com said the latest development was further proof that clients – corporates or individuals – have little confidence left in these organisations.
Mr Clark said: “It’s another clear demonstration for the umpteenth time that banks cannot be trusted.
“The future of small business owners has been gambled with by not having downside risk explained. No doubt [the IRHPs were] sold by local bankers who have never run a business in their lives.
“I have been contacted by many small businesses after ‘the horse has bolted’ and they are locked in to contracts that cost many thousands to buy out of.”
His comments came after the banks agreed to review their sales of the insurance products following a pilot investigation by the regulator last June, which found there had been “serious failings in the sale of IRHPs”.
Sales of the products by Allied Irish Bank (UK), Bank of Ireland, the Clydesdale and Yorkshire banks, Co-operative Bank, and Santander UK are also being reviewed.
An FSA spokesman said it looked at 173 sales of IRHPs to non-sophisticated customers among the four banks and found that more than 90 per cent did not comply with at least one or more regulatory requirements.
A wider review of up to 40,000 further product sales is now expected.
Andy McGregor, banking litigation partner at City law firm RPC, said: “A problem with the redress scheme is the banks have been given too much discretion to exclude from their reviews any customers who, they say, are ‘sophisticated’. This will push customers out of the redress scheme when they should be included.”
