Seven More Banks To Review Swaps Mis-selling - FSA

Date : 07/23/2012 @ 6:55AM
Source : Dow Jones News
Stock : Lloyds Banking Grp. Plc American Depositary Shares (LYG)
Quote : 3.32  -0.01 (-0.30%) @ 4:01PM

Seven More Banks To Review Swaps Mis-selling - FSA

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By Jason Douglas

LONDON--U.K. regulators said Monday seven more banks have agreed to examine whether they sold small businesses inappropriate financial products better suited to speculating in interest rate movements.

The Financial Services Authority said Allied Irish Banks PLC (ALBK.DB), Bank of Ireland (BIR.DB) and the U.K. arm of Spain's Banco Santander S.A. (SAN.MC) will review the sale of interest rate swaps and other derivatives to business customers, as will Clydesdale Bank and Yorkshire Bank, both units of National Australia Bank Ltd. (NAB.AU), the Co-operative Bank and Northern Bank, a unit of Danske Bank A/S (DANSKE.KO).

The FSA reached an agreement June 29 with four big banks to compensate small businesses and other customers who were inappropriately sold swaps and other complex financial products without receiving proper advice on the risks involved and without full disclosure of the potential cost.

The four banks--Barclays PLC (BARC.LN), Royal Bank of Scotland Group PLC (RBS.LN), Lloyds Banking Group PLC (LLOY.LN) and HSBC Holdings PLC (HSBA.LN)--also agreed to stop marketing some of the most complex products to retail customers.

Clive Adamson, FSA director of supervision, said there's no presumption on the part of the FSA that any of the seven banks that agreed Monday to join the review of past sales of such products were guilty of mis-selling. Their participation "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," he said.

The sale of complex derivatives to retail customers is the latest in a series of mis-selling scandals that U.K. banks have been embroiled in during the past decade. Lenders recently agreed to compensate customers wrongly sold payment protection insurance.

Banks' behavior has once more been in the spotlight in recent weeks after Barclays paid $450 million to settle claims its traders tried to rig a key interest rate. A parliamentary commission in the U.K. plans to investigate standards in the industry.

Write to Jason Douglas at jason.douglas@dowjones.com

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