Banks were ordered to pay more than £ 160million in compensation to customers last year after a clampdown by the financial regulator.
Mis-Sold Financial Products
Compensation was almost treble the 62million shelled out in 2010, while charges hit 66million, the second-highest total in the Financial Services Authority’s past – behind 2010’s 89million.
Barclays was the worst offender, according to research by law firm Freshfields reported in the Financial Times.
The bank was ordered to pay out 59million to retail industry clients and was fined 7.7 million for failings in the way it sold funds labeled ‘cautious’ and ‘balanced’.
The crackdown by the FSA also saw HSBC landed with the largest ever retail fine of 10.5 million for mis-selling investment bonds to elderly customers.
After criticism in the past that it went after smaller sized rather than the larger financial groups, the average market place capitalization of companies fined by the FSA rose 32 per cent year-on-year to 31billion, according to a Financial Times analysis.
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Large financial groups paid 55.7 million in fines during the year, down from 79million in FSA fines the past year.
Some of the largest penalties were the result of a crackdown on wealth management firms and providers that failed to segregate client assets from company money.
Acting FSA administration director Tracey McDermott told the newspaper: ‘We have had some significant retail fines against big firms that should know better.
‘The big players have the ability to damage greater swathes of the populace than the small firms.’
However the amounts may seem like a drop in the ocean as it was revealed today that Britain’s biggest financial institutions are aiming to rake in around 35billion in combined profits this year.
Barclays is expected to make 7billion profit during 2012, while state-supported Lloyds Banking Group is tipped to earn more than 3.3 billion and Royal Bank of Scotland– also bailed out by the taxpayer– is forecasted to report a gain of 4.6 billion after making a 1.1 billion loss in 2010.
HSBC, which has extensive operations overseas as well as on the UK high street, is forecast to make a mammoth 15.4 billion and fellow international bank Standard Chartered is tipped to earn # 4.6 billion.
The FSA is predicted to keep the number of incidents and size of fines high as it prepares to be split up into two regulatory agencies in 2013.
Banks were the FSA’s main target, but the insurance sector shared a greater percentage of the fines, up 14 per cent from 9 per cent.
Individuals were fined more than # 10million by the FSA, substantially more than 2010’s # 8.8 million and the greatest total ever for the watchdog.
Andrew Hart, Partner at Freshfields put forward that the actual costs of compensation to financial groups could be much higher than they at first seem. ‘It’s worth noting that figures for redress aren’t always available so the ‘real’ figure is going to be much higher,’ he said.
‘When you take into account that there are other penalties imposed by the FSA, such as the requirement to overhaul IT systems, bring in new teams to assure new processes are implemented or change operational systems the ‘hidden’ costs here can easily dwarf any obvious costs.’
FSA CORPORATE FINES 2010/11
|RBS and Natwest||£2,800,000||FSA oversaw significant changes to complaints handling|
|Bank of Scotland||£3,500,000||£17,400,000|
|Norwich and Peterborough Building Society||£1,400,000||£51,000,000|
Original Story in the Daily Mail
Barclays Mis-Selling & PPI: News
Barclays increases Financial Mis-Selling compensation funds
Barclays is understood to publish its finacial mis-selling endevours this week and announce an increase in the compensation funds set aside to deal with three types of financial products mis-sold by the Banking Giant.
The three types of Barclays mis-sold financial products:
- Payment Protection Insurance
- Interest Rate Swaps
- Credit Card Identity theft cover
Mis-sold Interest rate swap costs Barclays £1.5mil in compensation
Barclays is to pay £1.5 million in compenation for a mis-sold interest rate swap according to the Guardian. The case has been in court for the past 3 years over an interest rate swap sold to a holiday resort owner in Cornwall.
The compensation will not be paid until further losses and hardship caused by the interest rate swap has been calculated.
The need to agree to these so-called consequential losses means Barclays has not yet paid out to any customers claiming compensation for mis-sold interest rate swaps, which were intended to protect customers against interest rate rises.
Barclays Investments Mis-Selling
The bank has been fined £7.7m by the Financial Services Authority and will pay up to £60m compensation to customers of two investment funds. One in seven of the 12,000 investors complained about the advice received from July 2006 to November 2008. Barclays accepted it had ‘let customers down’ and has apologised.
PPI Claims Service UK
Maple Leaf Financial have a specialist team of solicitors dedicated to dealing with the mis-selling of payment protection Insurance (PPI) products by the banks. We are happy to review these PPI products and to claim compensation for our clients where appropriate.
We will work with you to ensure that you get the correct PPI settlement or refund and any and all fair compensation that may be due to you as a result of PPI mis-selling. We will deal directly with your PPI provider, be it a bank or insurance company and neither we nor our specialist claims team will be fobbed off by them at any stage. If their offer is too low or derogatory and they won’t take us seriously we will challenge them on your behalf.
Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
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