View the article online at http://citywire.co.uk/money/article/a606154
Seven more banks join hedging mis-selling probe
A total of 11 banks are now reviewing the sale of interest-rate hedging products to business customers.
Seven banks have volunteered to review the interest-rate hedging products they sold to businesses after four high-street banks were forced to pay compensation to customers after a decade of mis-selling.
Last month the Financial Services Authority (FSA) told RBS (RBS.L), Lloyds (LLOY.L), Barclays (BARC.L) and HSBC (HSBA.L) to pay compensation to business customers after ‘serious failings’ in the sale of products designed to hedge interest rates.
Now seven more banks – Allied Irish, Bank of Ireland (BKIR.L), Clydesdale and Yorkshire banks, Co-operative Bank (CPBK.L), Northern Bank and Santander UK – have agreed to review their sales and compensate any businesses that were mis-sold the products.
Combined, the seven banks sold 10% of the products, which can help protect customers against the risk of interest-rate movements. The products range from caps that fix an upper rate on a loan to complex instruments that fix interest rates within a band.
The FSA said it had not reviewed the sales made by the seven banks and has not found any mis-selling, but the fact that the banks agreed to join the review meant consumers could be sure of the best outcome.
Clive Adamson, director of supervision in the Conduct Business Unit at the FSA, said: ‘This is a major exercise but one that we hope will ensure even more businesses benefit from having their individual situations reviewed.
‘I am pleased that [the seven banks] have agreed to join the larger banks in reviewing their past sales. Although the number of their sales was smaller and while there is no presumption that mis-selling has occurred, it shows their willingness to do the right thing and ensure their customers who bought these products can be confident that they will be treated on an equal basis.’
The reviews will be undertaken by independent professionals and each customer has the right to have a reviewer present during any calls or meetings with the banks.
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- Bank of Ireland (BKIR.L)
- Co-Operative Bank PLC (CPBK.L)
- Santander UK PLC (SANS_pa.L)
- HSBC Holdings PLC (HSBA.L)
- Royal Bank of Scotland Group PLC (RBS.L)
- Barclays PLC (BARC.L)
- Lloyds Banking Group PLC (LLOY.L)
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by Gavin Lumsden on Mar 07, 2014 at 18:53