Trust in banking sector weakens as SMEs mis-sold costly interest rate insurance products

POSTED: 4th February 2013
IN: Business news

The Financial Services Authority announced this morning that up to 90 per cent of interest rate swap products were mis-sold to SMEs, eliciting a strong backlash against the banking sector.

The services, which guaranteed businesses a fixed interest rate on loan repayments, resulted in costing SMEs significant savings when the government slashed interest rates to 0.5 per cent in the wake of the recession.

As a result, some business customers were faced with prohibitively large and unannounced fees to cease the agreement, which many companies believed was a necessary requirement for their loan.

Experts have attributed this misinformation to the commission-based reward systems many banks operated, and have advised SMEs to seek independent advice in applying for compensation.

In the public domain, sentiment towards the UK banking sector appears to have been greatly impacted by the scandal, as evidenced by the collection of reactions below. Unless expressly stated otherwise, comments and views expressed in the below tweets do not necessarily represent the views of Aldermore or its employees. 

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