LONDON (Reuters) - Seven more British banks have agreed to review past sales of interest-rate hedging products to small businesses and to compensate customers for any misselling which may have occurred, Britain’s financial regulator said on Monday.
Allied Irish Bank (UK) ALBK.I, Bank of Ireland BKIR.I, Clydesdale and Yorkshire banks (NAB.AX), the Co-operative Bank CWSGR.UL, Northern Bank and Santander UK (SAN.MC) have now also agreed to participate in the FSA’s review.
A string of misselling cases has beset Britain’s financial services industry for more than two decades. Banks are already set to pay more than 9 billion pounds ($13.96 billion) in compensation to customers for misselling loan insurance.
The Financial Services Authority said in June that Britain’s four biggest banks - Barclays (BARC.L), HSBC (HSBA.L), Lloyds (LLOY.L) and RBS (RBS.L) - had agreed to pay compensation to customers they misled about such products.
The FSA said the seven banks make up only around 10 percent of the overall market for interest-rate hedging product sales in Britain and said it had not examined their sales and so had not found any finding of misselling to date.
“Although the number of their sales was smaller and while there is no presumption that misselling 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,” the FSA said.
The FSA said in June it had found evidence of “serious failings” by banks and its findings could lead to compensation claims ranging from many millions to several billion pounds from small companies who bought them.
The products range in complexity from caps that fix an upper limit to the interest rate on a loan, through to complex derivatives known as “structured collars” which fixed interest rates with a bank but introduced a degree of interest rate speculation.
Michael Brennan at Bracewell Law, which is acting on behalf of some of the small companies that sold the products, said there are likely to be around 4,000 claimants with total claims of 3-6 billion pounds though there are no set figures so far.
Reporting by Matt Scuffham; Editing by Louise Ireland