FSA initial review of misselling of swaps to SMEs to be issued this Friday.
A formal regulatory investigation into how thousands of small and medium-sized businesses came to be sold complex interest rate derivatives is likely to begin after the publication of FSA’s initial review on Friday 29th June. It is hoped that one of the consequences of the review may be that the banks will come under pressure to agree to a voluntary compensation scheme for victims.
A report in The Telegraph this past Saturday suggested that a full investigation may take at least a year and would raise the prospect of banks being hit with large fines as well as the possibility of bans for any staff found to have broken FSA rules. The Herald on Sunday also contained a detailed report on recent developments. For more press reports on the issue, read here.
Political pressure for tough action has grown. MPs from all over the UK accused lenders of the systematic abuse of their customers at the House of Common’s debate last week on the mis-selling scandal. In addition, the FSA met Chris Leslie, the shadow Treasury Secretary, and Toby Perkins, shadow small business minister, last week to discuss their proposals for establishing a victims compensation scheme and putting in place a moratorium to bar banks from foreclosing on businesses that claim to have been mis-sold a swap.
Despite the growing pressure, the high street banks all continue to deny that they systematically mis-sold interest rate hedging products. It will be interesting to see if that stance alters after the FSA report this Friday.....