UK banks to pay compensation over new mis-selling scandal

29 June 2012

Four of the UK's biggest banks will have to pay compensation to small businesses after they were found to have mis-sold specialist insurance on interest rate swap loans.

The Financial Services Authority (FSA) discovered "serious failings" in the practices of Barclays, HSBC, Lloyds and RBS.

It marks the latest in a long line of scandals for the banking sector in the country and comes just days after Barclays was fined £290 million ($453 million) for manipulating interest rates.

The figure the institutions have agreed to pay has not been revealed.

Martin Wheatley, managing director of the FSA's conduct business unit, said: "For many small businesses this has been a difficult and distressing experience with many people's livelihoods affected."

Since 2001, it is believed some 28,000 interest rate protection products have been sold to customers in the UK.

All four banks involved have confirmed they co-operated with the FSA throughout the whole process and are keen to resolve the matter.

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