The Financial Services Authority (FSA) has announced that seven additional banks have volunteered to review their sales of interest rate hedging products to small and medium sized businesses. Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire banks (part of the National Australia Group (Europe)), Co-operative Bank, Northern Bank and Santander UK have confirmed that they will participate in the review of their sales of these products and the redress exercise, on the same basis as those larger banks which signed the agreement that was announced on 29 June.
The banks announced today have a small proportion (around 10%) of the overall interest rate hedging product sales in the UK. The FSA has not examined their sales of interest rate hedging products and so has not made any finding of mis-selling, but in agreeing to join the review, they are ensuring customers that bought these products will be treated consistently, irrespective of who they bank with. This will be important to get the best outcome.
With eleven banks now signed up, the FSA has been working to ensure that banks fulfil their commitments to their customers as soon as practicable. An important aspect of this major exercise is to ensure cases can be assessed independently and the FSA has now agreed with the four larger banks the terms of reference for their independent reviewers. These include giving each customer the right to have an independent reviewer present during any meetings or calls with the bank. The FSA expects these banks to proceed rapidly with their reviews.
Clive Adamson, director of supervision in the Conduct Business Unit, said:
“This is a major exercise but one that we hope will ensure even more businesses benefit from having their individual situation reviewed.
“I am pleased that Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire banks, Co-operative Bank, Northern Bank and Santander UK have agreed to join the larger banks in reviewing their past sales. Although the number of their sales was smaller and while there is no presumption that mis-selling 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.
“Following the agreement announced on 29 June, we have pushed ahead with the necessary work to bring this announcement into reality. The terms of reference that we have agreed for the independent reviewers shows the detailed and thorough scrutiny that we will expect of them.”