By Claire West
The Financial Services Authority (FSA) has reached an agreement with Barclays, HSBC, Lloyds and RBS to pay compensation to customers they mis-sold interest rate swap arrangements (IRSAs).
Small-to-medium size businesses are reliant on the ongoing support of their bank and in many cases either trusted their bank or felt that ongoing bank support was contingent on them agreeing to purchase the IRSA.
Small business customers were told that interest rates were likely to rise and that if that happened they would be unable to meet the cost of their borrowings.
In fact this was a complex financial product that was too sophisticated for most businesses and has in fact cost them dearly.
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."
If you think your business is a victim of this abuse of ‘trust’ there is a campaigning group called Bully Banks set up in December 2011 by a small group of UK business owners who had been mis-sold an IRSA - www.bully-banks.co.uk
This latest scandal comes close on the heels of Barclays Bank Plc (Barclays) getting a record fine of £59.5 million for misconduct relating to the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR).
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