The mainstream media were too caught up in the excitement surrounding the LIBOR scandal. The following judgement from the FSA largely remained under the radar screen:
The FSA has today announced that it has found serious failings in the sale of interest rate hedging products to some small and medium sized businesses (SMEs). We believe that this has resulted in a severe impact on a large number of these businesses. In order to provide as swift a solution to this problem as possible we have today confirmed that we have reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate redress where mis-selling has occurred.
The FSA found a range of poor sales practices including: Poor disclosure of exit costs; a failure to ascertain the customers’ understanding of risk; non-advised sales straying into advice; “Over-hedging” (i.e. where the amounts and/or duration did not match the underlying loans.
The FSA concluded that "rewards and incentives" were the driver of these practices. Really???
5 comments:
It never ends....one scan follows another.
Mass resignations from FSA due any day now
Keep up the good work Alice ... From little acorns ......
Dodgy products doubtless flogged by people desperate to get into rising property prices.
It's not just Barclays.... Some of the other banks need to be headlined too, especially if they're otherwise managing to keep their heads below the parapet on other things, like HSBC for example.
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