Banks face new wave of mis-selling payouts
Britain's banks are, quite possibly, the most hated people in history. They're worse than Nazis and Manchester United fans. And things are going to get worse for them as they've been collectively told that they are facing yet more massive compensation bills after a review of products sold to small businesses found more than 90% had been mis-sold.
The FSA said that a significant number of cases were likely to result in payouts being handed out to customers, with as many as 40,000 of the interest rate swaps being mis-sold to small businesses since the end of 2001.
The FSA today said the UK's big four banks (Barclays, HSBC, Lloyds and RBS) have already agreed to start reviewing individual sales and providing compo. And how much will this cost? It could reach the nosebleed heights of £1.5 billion across the sector.
Interest rate swaps were sold as protection against interest rate rises, however, small businesses soon found they were being lumbered with huge bills after the financial crisis.
Martin Wheatley, chief executive designate of the Financial Conduct Authority, said he hoped the FSA's actions will ensure a fair and reasonable outcome, adding: "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. But it is important to remember that this review is firmly focused on the particular circumstances of each sale. These will determine whether there were failings in the sales process and, if so, whether redress is due."