In an arduous week for the UK 's banks, the Financial Services Authority (FSA) has revealed the details of yet another mis-selling scandal, this time involving small and medium-sized businesses (SMEs).
The regulator has today announced that a number of the UK's biggest banks have been found guilty of mis-selling interest rate hedging products to SMEs.
These specialist insurance products are usually taken out to protect businesses from paying high rates on loans when bank interest rates go up.
The FSA said that it has reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate redress to affected businesses where mis-selling has occurred.
The regulator did not say how much this compensation would amount to.
It is thought that since 2001 around 28,000 of these products have been sold to thousands of SMEs.
Those businesses affected will be contacted by their banks and the FSA will appoint an independent reviewer to oversee the compensation process.
Not all businesses will be owed redress, but for those that are, the exact redress will vary from customer to customer, but could include a mixture of cancelling or replacing existing products, together with partial or full refunds of the costs of those products.
"For many small businesses this has been a difficult and distressing experience with many people's livelihoods affected. Our work has focused on ensuring a swift outcome for these businesses that form such an important part of the economy," said the FSA's managing director of its Conduct Business Unit, Martin Wheatley.
"I am pleased that Barclays, HSBC, Lloyds and RBS have agreed to do the right thing by their customers and offer redress or a review of past sales. These firms have responded to the need to provide a fair deal for customers by working with us, and I welcome this outcome.
"I am particularly pleased that the CEOs: Bob Diamond, Brian Robertson, Antonio Horta Osorio and Chris Sullivan have provided a personal assurance that they will have responsibility for oversight of this work and will ensure that complainants are treated fairly."
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