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FSA raps banks over interest rate swaps

Six banks are to review sales of interest rate swap products to small businesses after a damning initial review by the Financial Services Authority.

An FSA pilot check found more than 90% of sales by Santander UK, Allied Irish Bank, Bank of Ireland, the Co-operative Bank and Clydesdale and Yorkshire banks did not comply with one or more of the regulatory requirements.

The regulator said a significant proportion of those cases could trigger compensation claims from customers.

However, it warned the results were unlikely to be representative of the full review "given the small sample size from these banks and the more complex nature of sales in the pilot".

The big four banks – RBS, Lloyds, Barclays and HSBC – have already begun assessing compensation claims after the FSA found they had mis-sold interest rate swap products.

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