Failings 'affected livelihoods'
Business owners who were mis-sold interest-rate swaps suffered "a difficult and distressing experience with many people's livelihoods affected", the City watchdog has said.The FSA has spent the last two months reviewing the sale of interest-rate hedging products, talking to more than 100 customers who came forward, and found "serious failings".
Poor sales tactics were uncovered including failing to provide sufficient information on the hefty exit costs involved, failure to gauge the customers' understanding of risk and found rewards and incentives were a driver of these practices.
As well as offering redress directly for those customers that bought the most complex products, HSBC, RBS, Lloyds and Barclays have also agreed to stop marketing certain hedging products to retail customers.
Not all businesses will be owed redress, the FSA added, but for those that are, the exact redress will vary from customer to customer. This exercise will be scrutinised by an independent reviewer at each bank appointed under the FSA's powers.
Andrew Tyrie, Treasury Select Committee chairman, said the committee would be looking at the FSA's findings in more detail.
He said: "Such products took advantage of small businesses, many of which could not reasonably have been expected to understand what they were signing up to, at a time when loans were difficult to come by. This is completely unacceptable."
The FSA said it received personal reassurances from the bosses of the banks involved - including Bob Diamond at Barclays - that they will have responsibility for oversight of this work.
The British Bankers' Association, the leading trade association for the UK banking and financial services sector with more than 200 member banks, said: "Our members have been working closely with the FSA while it carries out its thematic review into interest rate swaps and will continue to co-operate fully."
John Longworth, director general at the British Chambers of Commerce (BCC), said the mis-selling claims will damage business' perception of banks further. He said: "Relationships between institutions that provide finance and those that receive it must be based on trust. Unfortunately, the revelations of the last week will only erode confidence in the banking system, and it will be a long road back to restore it."
Andrew Tyrie, Treasury Select Committee chairman, said the committee would be looking at the FSA's findings in more detail.
He said: "Such products took advantage of small businesses, many of which could not reasonably have been expected to understand what they were signing up to, at a time when loans were difficult to come by. This is completely unacceptable."
The FSA said it received personal reassurances from the bosses of the banks involved - including Bob Diamond at Barclays - that they will have responsibility for oversight of this work.
The British Bankers' Association, the leading trade association for the UK banking and financial services sector with more than 200 member banks, said: "Our members have been working closely with the FSA while it carries out its thematic review into interest rate swaps and will continue to co-operate fully."
John Longworth, director general at the British Chambers of Commerce (BCC), said the mis-selling claims will damage business' perception of banks further. He said: "Relationships between institutions that provide finance and those that receive it must be based on trust. Unfortunately, the revelations of the last week will only erode confidence in the banking system, and it will be a long road back to restore it."
© 2013 Press Association