View more on these topics

FSA takes action on interest rate swap misselling claims

The FSA is reviewing the sale of interest rate swaps following pressure from MPs due to concerns the products were missold.

The swaps are designed so that banks cover the cost of increased payments in the event of interest rate rises while the customer has to pay the bank in the event that rates fall. Many of the products were sold between 2006 and 2008, before bank rate fell to its current historic low.

Last month, lawyers representing clients who allege they were missold the swaps told a group of 40 MPs that clients were not warned they would face penalties if rates fell.

Last month, Money Marketing revealed the 40 MPs have written to the Treasury select committee asking it to launch an inquiry into the issue. They also agreed to table a request for a backbench business debate.

Last week, Treasury financial secretary Mark Hoban confirmed the regulator will review the sale of interest rate swaps in a response to a parliamentary question from Labour MP Jim Cunningham.

Cunningham says some businesses in his constituency are facing bankruptcy as a result of purchasing the swaps. He says: “They do not have the resources to litigate against the banks. What is needed is for banks to come clean and release details of the number of business affected by the misselling of IRSAs.”

The response says: “The FSA is currently carrying out a review of this issue. As part of this, the FSA is considering additional information from the small businesses that purchased these products, to help them better quantify the size of the issue and to establish whether any banks have failed to comply with their obligations under the FSA conduct of business sourcebook.”

An FSA spokesman says: “The work we are doing is to find out more about the products sold, how they were sold and whether they met customers’ needs. We have already received some detailed information from banks in connection with their sales of interest rate swaps, which we are considering, and we have also spoken to a number of customers who have been affected. If we find widespread evidence of breaches or misselling we will take appropriate action.”

The spokesman says the regulator “expects to make its findings public in due course”.


Point of difference

The absolute return category is growing in popularity but also in complexity, making it difficult to compare funds like for like, says Gregor Watt

Lloyds to shrink its share of the mortgage market

Lloyds Banking Group is planning to cut its share of the mortgage market from 28 per cent to 25 per cent. In a call with analysts to discuss the company’s first quarter results last week, LBG chief executive Antonio Horta-Osario pledged to increase the bank’s share of the retail deposit market and reduce its share […]

Abbey for Intermediaries launches NewBuy range

Abbey for Intermediaries has launched a range of products for the Government’s flagship housing initiative NewBuy. AFI is offering a three-year fixed rate and a five-year fixed rate at 5.49 per cent and a seven-year fixed rate at 5.99 per cent. All three products are available for a £99 fee. The three products are limited […]

How do you choose the best online service?

By Ross Jackson, senior marketing manager There are many different protection online services available in the market and no doubt you’ll have used a few when submitting protection business. But why should you have to put up with slow, unresponsive sites for your business when you’re used to dealing with slick, modern user experiences in your […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment