By Laura Moulden
The Financial Services Authority (FSA) has revealed the scale of the scandal facing British banks over interest rate swap mis-selling.
In a report released this morning (January 31st), the body confirmed that Lloyds, RBS, HSBC and Barclays would be commencing a full review into their sales of such products to small businesses.
Martin Wheatley, chief executive officer designate of the Financial Conduct Authority claimed the review into interest rate hedging sales would result in “a fair and reasonable outcome” for affected companies.
“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,” he said.
A pilot investigation by the FSA looked at 173 sales of such products to “non-sophisticated” customers and found that more than 90 per cent of the sales breached regulatory requirements.
Banks involved in the scandal came under fire from the business community, with the Federation of Small Business calling for “swift and decisive” action to redress affected firms.
“The FSA’s report into mis-selling highlights the seriousness of the situation finding that 90 per cent of loans were mis-sold. This is alarming, but will come as a relief to the thousands of small firms who have been anxiously waiting for an outcome,” national chairman John Walker said.
An investigation into sales of interest rate hedging products by Allied Irish Bank, the Co-Operative Bank and Santander UK was also announced by the FSA.