By Jason Douglas
LONDON--U.K. regulators said Monday seven more banks have agreed
to examine whether they sold small businesses inappropriate
financial products better suited to speculating in interest rate
movements.
The Financial Services Authority said Allied Irish Banks PLC
(ALBK.DB), Bank of Ireland (BIR.DB) and the U.K. arm of Spain's
Banco Santander S.A. (SAN.MC) will review the sale of interest rate
swaps and other derivatives to business customers, as will
Clydesdale Bank and Yorkshire Bank, both units of National
Australia Bank Ltd. (NAB.AU), the Co-operative Bank and Northern
Bank, a unit of Danske Bank A/S (DANSKE.KO).
The FSA reached an agreement June 29 with four big banks to
compensate small businesses and other customers who were
inappropriately sold swaps and other complex financial products
without receiving proper advice on the risks involved and without
full disclosure of the potential cost.
The four banks--Barclays PLC (BARC.LN), Royal Bank of Scotland
Group PLC (RBS.LN), Lloyds Banking Group PLC (LLOY.LN) and HSBC
Holdings PLC (HSBA.LN)--also agreed to stop marketing some of the
most complex products to retail customers.
Clive Adamson, FSA director of supervision, said there's no
presumption on the part of the FSA that any of the seven banks that
agreed Monday to join the review of past sales of such products
were guilty of mis-selling. Their participation "shows their
willingness to do the right thing and ensure their customers who
bought these products can be confident that they will be treated on
an equal basis," he said.
The sale of complex derivatives to retail customers is the
latest in a series of mis-selling scandals that U.K. banks have
been embroiled in during the past decade. Lenders recently agreed
to compensate customers wrongly sold payment protection
insurance.
Banks' behavior has once more been in the spotlight in recent
weeks after Barclays paid $450 million to settle claims its traders
tried to rig a key interest rate. A parliamentary commission in the
U.K. plans to investigate standards in the industry.
Write to Jason Douglas at jason.douglas@dowjones.com
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