AIB and Bank of Ireland agree to have sales of some financial products reviewed
AIB and Bank of Ireland have agreed to have sales of some complex financial products to UK business customers independently reviewed, the Financial Services Authority (FSA) announced today.
The two Irish banks are among 11 lenders now participating in a scheme to “review and redress” sales of “interest rate swaps” to small and medium-sized companies in the UK.
The swaps are designed to protect the holder from moves in currencies.
The London based regulator launched a wide ranging review of the products in June, after it became concerned that some businesses were left with huge costs to exit swaps, and that some may have been sold unnecessary products by banks.
The FSA said it took the action after finding a range of poor sales practices at banks, including: poor disclosure of exit costs; failure to ensure customers’ understood product, sales techniques that strayed into advice, and rewards and incentives for bankers rather than customer need being a driver of these practices.
“The FSA has not examined their sales of interest rate hedging products and so has not made any finding of mis-selling, but in agreeing to join the review, they are ensuring customers that bought these products will be treated consistently, irrespective of who they bank with. This will be important to get the best outcome,” the statement said.