In recent weeks The Telegraph has been investigating allegations that UK banks have been misselling financial products to SMEs in the UK and there are growing concerns that the amount of reparation will at least equal that of mis sold PPI of recent years. Within the past three weeks evidence has been mounting these banks are selling derivatives under the premise that they are interest rate swaps. Literally thousands of customers have been mis-sold these products without having been given the benefit of relevant details.
Two banks in particular have been mentioned by this newspaper, which include the Royal Bank of Scotland and Barclays. According to Damien Reece writing for The Telegraph the Royal Bank of Scotland has reportedly admitted to selling interest-rate swaps as derivatives and that Barclays did settle out of court in order for details from reaching the public. According to Reese, Barclays had also previously been forced into an apology to the FSA because it had come to light that they had asked their customers to withhold important information from the UK regulator.
According to the investigation conducted by The Telegraph, Professor Emeritus Michael Dempster of the Centre for Financial Research, University of Cambridge, believes that this could be easily as huge as the £5 billion scandal in the misselling of payment protection insurance. The Telegraph reports that the FSA has given them a promise to review the evidence it has been handed but Mr. Reece believes they are not moving quickly enough. During this time the problem is compounding itself which will mean that businesses are incurring even greater losses. He further states that the paper has done more than its fair share of doing the FSA’s job for them.
