Britain’s biggest banks have agreed to a settlement for misrepresenting interest-rate protection products sold to small and medium-sized businesses, the country’s financial regulator said on Friday.
The Financial Services Authority said Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have all agreed to provide redress to victims of the practice.
The news is the latest setback to befall the sector. It has previously been found liable for misrepresenting payment protection insurance and this week Barclays was fined $453 million by US and UK agencies for misreporting key interest rates.
The FSA said some 28,000 interest rate protection products had been sold to businesses since 2001. It gave no estimate of how many customers would be entitled to redress, or how much it would cost the banks but said the products range from simple caps that set an upper limit on the interest rate, to more complex derivative products. The regulator found cases of poor disclosure of exit costs, failure to be sure that customers understood risk, and over hedging.