The Government is piling pressure on the FCA to carry out an independent review of the redress scheme for small businesses missold interest rate hedging products.
Treasury economic secretary Andrea Leadsom wrote to FCA chairman John Griffith-Jones yesterday urging the regulator to accept the Treasury committee’s recommendation to “establish whether there are systemic failures in the redress scheme and publish its findings”, the FT reports.
The committee voiced concerns in February that the scheme had allowed banks to avoid paying “meaningful redress”.
Nine banks have been ordered to pay redress, currently worth over £1.8bn, to all firms which did not meet the “sophisticated customers” test, based on turnover, balance sheet and staff headcount.
In 2012 the FCA found failings in how some banks sold structured collars, swaps, simple collars and cap products. In May 2013 the regulator began a review of sales made to unsophisticated customers since 2001.
The products were popular prior to the financial crisis as businesses tried to guard against the risk of interest rates rising. However, many firms had to pay out when rates fell.