Newspaper article The Journal (Newcastle, England)

Banks Pay More Than PS1.5bn over Rate Swaps

Newspaper article The Journal (Newcastle, England)

Banks Pay More Than PS1.5bn over Rate Swaps

Article excerpt

BANKS have paid out more than PS1.5bn in compensation to small firms mis-sold complex financial products known as interest rate swaps, new figures show.

The products were meant to help the companies to hedge against rising interest rates, but when these fell they were left paying extra charges and facing penalties to get out of the deals.

Banks have set aside large sums to compensate those affected by the mis-selling after it was identi-fied by the City regulator in 2012 and last year began reviewing their sales of such products to "unsophisticated" customers since 2001.

But just PS2m had been paid out by September 2013 and the Financial Conduct Authority (FCA) wrote to the chief executives of Royal Bank of Scotland, HSBC, Barclays, and Lloyds urging them to increase the pace.

FCA chief executive Martin Wheatley last year rebuked the banks over the delays, saying they compounded the unfairness of selling a complex product to companies without an understanding of the risks - with many left struggling to make ends meet. …

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