AS MANY as 40,000 complex financial products could have been mis-sold to small businesses, according to the City watchdog’s latest estimate of the scale of the banking scandal.
The Financial Services Authority (FSA) confirmed it had increased its estimate of the number of so-called interest rate swap arrangements that were sold by more than 40 per cent, up from 28,000 initially.
The new figure comes after the regulator was supplied with new information by the banks and suggests the industry could be facing a hefty compensation bill.
Three of Britain’s biggest banks – Barclays, HSBC and Royal Bank of Scotland – have set aside around £630 million to cover the cost of potential mis-selling claims.
The FSA revealed in June that it found “serious failings” in the sale of the interest rate swap products to small businesses.
Banks are working with the FSA to begin the compensation process and have launched pilots where a sample number of cases is reviewed to assess if mis-selling took place and potential compensation.
As well as offering redress directly for those customers who bought the most complex products, the banks have also agreed to stop marketing certain interest rate products to retail customers.
The FSA found poor sales tactics including failing to provide sufficient information on the hefty exit costs involved, failure to gauge the customers’ understanding of risk and it found rewards and incentives were a driver of these practices.
The new figure comes after the regulator was supplied with new information by the banks and suggests the industry could be facing a hefty compensation bill.
Three of Britain’s biggest banks – Barclays, HSBC and Royal Bank of Scotland – have set aside around £630 million to cover the cost of potential mis-selling claims.
The FSA revealed in June that it found “serious failings” in the sale of the interest rate swap products to small businesses.
Banks are working with the FSA to begin the compensation process and have launched pilots where a sample number of cases is reviewed to assess if mis-selling took place and potential compensation.
As well as offering redress directly for those customers who bought the most complex products, the banks have also agreed to stop marketing certain interest rate products to retail customers.
The FSA found poor sales tactics including failing to provide sufficient information on the hefty exit costs involved, failure to gauge the customers’ understanding of risk and it found rewards and incentives were a driver of these practices.
Very nice information. It will be useful for many people.
ReplyDeleteFSA mis-selling swaps