The Financial Services Authority (FSA) has confirmed that Barclays, HSBC, Lloyds and RBS will start the full review of their sales of interest rate hedging products (IRHPs) to small businesses. In June last year, the FSA announced that it had found serious failings in the sale of IRHPs. Today’s announcement means that these banks have agreed to work on reviewing individual sales and providing redress to customers based on principles outlined in today’s FSA report, and overseen by independent reviewers.
The work on the pilot review has confirmed the FSA’s initial findings of mis-selling of IRHPs. The FSA looked at 173 sales to non sophisticated customers and found that over 90% of the sales did not comply with at least one or more regulatory requirement. A significant proportion of these 173 cases are likely to result in redress being due to the customer.
Where redress is due, the FSA has reiterated the fundamental principle that it must be fair and reasonable for individual customers. 
Martin Wheatley, CEO designate of the Financial Conduct Authority, said:
“This marks significant progress in our review of these products.  We believe that our work will ensure a fair and reasonable outcome for small and unsophisticated businesses. Small businesses will now see the result of the review as the banks look at their individual cases. Where redress is due, businesses will be put back into the position they should have been without the mis-sale. But it is important to remember that this review is firmly focused on the particular circumstances of each sale. These will determine whether there were failings in the sales process and, if so, whether redress is due.” 
Balfour+Manson are advising a number of clients on these mis-selling claims. 
If you need further information, please contact Gordon Deane on 0131 200 1485. Gordon is part of the QA Legal network advising clients across the country on these claims.