What are interest rate swaps?

An FSA review found that more than 90% of so-called interest rate swaps sold to businesses were mis-sold. But what are they?

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Asda recalls corned beef products over traces of 'bute'

Asda has recllaed all corned beef products in its budget range
Asda has recllaed all corned beef products in its Asda Smart Price range Credit: Nick Ansell/PA Wire

Asda is recalling all corned beef products from its budget range after traces of veterinary drug phenylbutazone were found in some batches.

The Food Standards Agency said "very low levels" of the painkilling medicine, known as bute, were detected in the Asda Smart Price Corned Beef.

Customers who have bought the 340g tins, with any date code, have been urged not to eat the corned beef but to return it to the supermarket.

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FSA chairman Lord Turner 'to join US think tank'

Lord Turner is widely believed to have narrowly missed out on the post of Governor of the Bank of England. Credit: PA

Outgoing City regulator Lord Turner has landed a job working alongside legendary US investor George Soros, according to reports today.

Lord Turner - chairman of the Financial Services Authority (FSA), which is being disbanded as part of a regulation overhaul taking effect tomorrow - is understood to be joining a New York-based not-for-profit research group founded by the billionaire financier.

He will reportedly work for the Institute for New Economic Thinking, which was founded by hedge fund investor Mr Soros in 2009 with an initial endowment of $50m (£33m) and a remit to help prevent future global financial crises.

The FSA is being demolished from tomorrow, when it will be replaced by a trio of regulatory groups - the Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority.

Prudential hit with fine for 'failing to be cooperative'

Prudential has been hit with a £30 million fine for breaching financial regulations. The Financial Services Authority says the company failed to inform them "at the earliest opportunity" that it wanted to acquire AIA, the Asian subsidiary of AIG, in 2010.

Offices of financial services company Prudential in central London
Offices of financial services company Prudential in central London Credit: Press Association

Prudential was accused of failing to deal with the FSA in an "open and cooperative manner". The financial services company only told the FSA about its plans after they were leaked to the media.

UBS fined £9.45 million for mis-selling

Swiss banking giant UBS has been handed another big fine after it mis-sold a savings product linked to the bailed-out insurer AIG.

In addition to the £9.45 million penalty from the Financial Services Authority (FSA), the bank will also have to pay compensation of around £10 million to the consumers who were left exposed by the suspension of the AIG fund.

A general view of the offices of investment bank UBS in London.
UBS was handed another fine today after it mis-sold a savings product linked to AIG. Credit: John Stillwell/PA Wire

The FSA said the bank had not understood the product it was selling, failed to recommend it to the right customers and did not take effective action when the financial crisis struck.

Tracey McDermott, the FSA's director of enforcement and financial crime, said UBS has "paid the price for its failures".

What is the veterinary drug phenylbutazone or 'bute'?

Animals treated with the veterinary drug phenylbutazone - or 'bute' - are not allowed to enter the food chain as it may pose a risk to human health.

  • Bute was banned from use in humans after it was found that about 1 person in 30,000 recipients suffered a serious side effect.
  • Bute can cause rare cases of a serious blood disorder, aplastic anaemia.
  • In levels reported in previous FSA testing of contaminated meat, the maximum level found would have to be multiplied a thousand-fold to be at the same level as which used to be given to humans.
  • It suggests that even if someone eats contaminated meat, the risk of damage to their health is very low.

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BBA: Businesses affected should contact their bank

The British Bankers Association has welcomed today's report from City watchdog, the Financial Services Authority, into mis-sold interest rate swaps, and has said their members will work with customers affected by the scandal, "prioritising those with the greatest need."

The announcement today will give clarity to businesses and will enable the banks to put in place the steps needed to resolve each case for customers. Where customers have suffered unfairly the banks have all agreed that they will put it right.

Banks will be contacting those companies affected shortly, prioritising those with the greatest need. Any business which is currently facing financial distress and is seeking a suspension of payments should get in touch with their bank immediately.

– BBA Chief Executive, Anthony Browne.
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