"Financing projects from £50,000 to £100 million"

Banks agree to FSA review of hedging products sold to SMEs

Banks agree to FSA review of hedging products sold to SMEs

Seven further banks have said that they will review their sales of interest rate hedging products to small and medium sized businesses.

Allied Irish Bank (UK), the Bank of Ireland, Clydesdale and Yorkshire Banks, the Co-operative Bank, Northern Bank, and Santander UK have all agreed to co-operate with the FSA's review, following an agreement already made with Barclays, HSBC, Lloyds and the RBS group.

Each bank will be required to submit details of an independent reviewer to the FSA, who will approve or reject the nomination.

Reviewers will report on the past selling of interest rate hedging products and the redress exercise. They will also ensure that each bank determines whether past sales contravened regulation, and calculates redress fairly in each individual case.

The independent reviewer can also be present during meetings or phone calls at a customer’s request.

Though the seven extra banks comprise a relatively small proportion of the sales of interest rate hedging products and no allegations of mis-selling have yet been made, their decision to join the review ensures that the review is more comprehensive and that consumers will be dealt with consistently.

Clive Adamson of the FSA’s Conduct Business Unit expressed his gratitude that the seven banks had joined the review.

"Although the number of their sales was smaller and while there is no presumption that mis-selling has occurred, it shows their willingness to do the right thing and ensure their customers who bought these products can be confident that they will be treated on an equal basis," he said.

"Following the agreement announced on 29 June, we have pushed ahead with the necessary work to bring this announcement into reality. The terms of reference that we have agreed for the independent reviewers shows the detailed and thorough scrutiny that we will expect of them."

The FSA now expects banks to make rapid progress with these reviews.

Monday, 23 July 2012 10:06
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