More than 90% of interest rate hedging product sales by the big four banks to 'non-sophisticated' customers failed to meet regulatory standards, a Financial Services Authority report has found.
HSBC, Lloyds, Barclays and RBS have all committed to open full reviews of their sales procedures, said the FSA, following the launch of its interim investigation into interest rate hedging products (IRHP).
'This marks significant progress in our review of these products,' said Martin Wheatley, chief executive of the Financial Conduct Authority, which will take over retail financial regulation later this year.
'We believe that our work will ensure a fair and reasonable outcome for small and unsophisticated businesses.
'Small businesses will now see the result of the review as the banks look at their individual cases. Where redress is due, businesses will be put back into the position they should have been without the mis-sale.'
Following last year's revelations of Libor manipulation and the first of the big regulatory penalties, civil cases bought in the US over interest rate hedges are among the banking sector's biggest liabilities.
The FSA is continuing to investigate sales by Allied Irish Bank, Clydesdale and Yorkshire banks, the Co-Operative Bank and Santander UK, and hopes to publish its findings next month.