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Business News

£160m bank compensation payouts last year


Banks paid more than £160 million in compensation to customers last year after a crackdown by the financial regulator.

Barclays was the worst offender in a year in which compensation was nearly treble the £62 million in 2010, according to research by law firm Freshfields reported in the Financial Times.

The bank was ordered to shell out £59 million to retail customers and was fined £7.7 million for failings in the way it sold funds labelled “cautious” and “balanced”.

The crackdown by the Financial Services Authority (FSA) also saw HSBC landed with the largest ever retail fine of £10.5 million for mis-selling investment bonds to elderly customers.

Large financial groups paid £55.7 million in fines during the year, down from £79 million in FSA fines the previous year.

Banks were ordered to pay at least £1 million in compensation in at least five cases.

Acting FSA enforcement 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 potential to damage larger swathes of the community than the small firms.”

When penalties against individual salesmen were included, the FSA handed out just over £66 million in fines last year. This was the second highest total in its history behind 2010's £89 million.

Some of the largest penalties were the result of a crackdown on wealth management firms and companies that failed to segregate client assets from company money.