City regulator under fire amid mystery of mis-selling ‘swaps’ scandal penalties

The Financial Conduct Authority was criticised in an independent report by John Swift, QC, for failing to take enforcement action against nine banks found to have mis-sold the interest rate derivatives
The Financial Conduct Authority was criticised in an independent report by John Swift, QC, for failing to take enforcement action against nine banks found to have mis-sold the interest rate derivatives
ALAMY

The City regulator has been asked to explain what happened to a plan to hit bankers in the pocket as punishment for a multibillion-pound mis-selling scandal.

Documents that emerged this month revealed that the predecessor to the Financial Conduct Authority had approved proposals to tell banks to cut bonuses over the mis-selling of interest rate derivatives to small and medium-sized companies. However, no records are available to show if the sanctions were acted upon.

The “swaps” products were sold to tens of thousands of businesses between 2001 and 2011 as “protection” against rising interest rates, but they left companies facing disastrous losses when rates dropped during the financial crisis. An investigation found that more than 90 per cent had been mis-sold.

The FCA was criticised