Financial firms pay out £160m in compensation in 2011

Rights, Scams and Politics

Updated on 04 January 2012 | 1 Comment

Barclays tops list of companies ordered to pay out money to customers for mis-selling.

The Financial Services Authority (FSA) dished out fines worth £55.7 million and ordered companies to pay out over £160 million in compensation in 2011.

Research by law firm Freshfields Bruckhaus Deringer reported in the Financial Times found that Barclays had to pay out the most compensation. Back in January, it was ordered to pay out £59 million to customers it had sold funds labelled ‘cautious’ and ‘balanced’ to without adequately explaining the risks involved.

That figure alone is only a fraction less than the total compensation paid out by all firms in 2010. Barclays was also fined £7.7 million for the mis-selling.

And Barclays’ investment arm, Barclays Capital, was subsequently fined £1.12 million for failing to protect and segregate client money.

Another high-profile, more recent example was HSBC’s £10.5 million fine in December for mis-selling investment products to elderly customers. It will also pay out compensation in the region of £29 million to customers and their families.

Meanwhile, Norwich and Peterborough Building Society was fined £1.4 million for failing to give suitable advice around the sale of the now infamous Keydata investment products. It also paid out £51 million in ex-gratia payments to customers.

In May, Bank of Scotland was fined £3.5 million for customer complaint handling failures around retail investment products. Its final compensation bill for that failure is likely to exceed £17.5 million.

And high street retailer JJB Sports was fined £455,000 for failing to disclose the true cost of two companies it had bought.

Fines to individuals, which came to £12.9 million, were up by 47% on 2010.

More: Seven rip-offs to ditch in 2012 | The banks you can’t trust!

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