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Banks' rate swap mis-selling bill to top £1.5bn
by Michelle Abrego on Jan 21, 2013 at 08:00
HSBC, Royal Bank of Scotland (RBS), Lloyds and Barclays are facing a compensation bill over the mis-selling of controversial ‘rate swaps’ of more than double the £720 million they have already set aside, according to The Sunday Telegraph.
It cited a ‘senior banking source’ as claiming the banks would have to up their provisions, and claimed one of the four was set to treble its provision.
The Financial Services Authority (FSA) has set up a redress scheme over rate swap mis-selling, with 11 banks having signed up to it. Banks have sold around 28,000 of the products, which were meant to protect against inflation rises, to small and medium-sized businesses.
News of the likely increase in bank provisions comes as RBS faces the prospect of an appeal against its victory in what was thought to be the first swaps case to reach the High Court.
Hotelier Paul Rowley and business partner John Green have instructed lawyers to appeal the ruling, arguing the pair were mis-sold an interest ate swap.
Jon Green of law firm Clarke Wilmott, which is representing the pair, said: 'Banks are required by the FSA to be clear and fair in their discussions with clients and to ensure that their clients understand the nature of the risks inherent in these products. It is clear to me that RBS failed to do that.'
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