FSA extends probe into rate swap mis-selling scandal Santander, Co-operative Bank, Allied Irish Bank, Bank of Ireland, Clydesdale and Yorkshire banks, and Northern Bank have joined the regulator's "redress" scheme, which will see the banks review their sales of interest rate swaps to small and medium-sized companies and compensate those that have been mis-sold the most complex products. The FSA has not examined their sales of interest rate hedging products and so has not made any finding of mis-selling, but in agreeing to join the review, they are ensuring customers that bought these products will be treated consistently, irrespective of who they bank with. This will be important to get the best outcome," the statement said. However, the FSA said it has now agreed the terms of reference for the banks" independent reviewers to manage the process "objectively and consistently." These include giving each customer the right to have an independent reviewer present during any meetings or calls with the bank. The regulator said it "expects these banks to proceed rapidly with their reviews." Clive Adamson, director of supervision in the FSA's conduct business unit, said: "This is a major exercise but one that we hope will ensure even more businesses benefit from having their individual situation reviewed. The terms of reference that we have agreed for the independent reviewers shows the detailed and thorough scrutiny that we will expect of them. The independent reviewer will typically be an accountancy, law or consultancy firm, the FSA said. While they will be appointed by each bank, the regulator must approve the selection and "where a conflict of interest arises, including where the independent reviewer has a conflict of interest with the customer, we will require the bank to involve a second independent reviewer." Affected companies had feared banks would, for example, appoint accountancy firms who had already been involved with administration processes caused by swap sales. "We will need to be satisfied with each bank's proposed process before it goes ahead with the redress exercise and the past business review," the FSA said. This will involve a pilot exercise before the FSA agrees to the banks proceeding.