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Wed, 20th Jun 2012 15:28

LONDON, June 20 (Reuters) - Contracts bought by UK businesses to insure against unexpected hikes in interest rates raise concerns that may need addressing, Britain's markets regulator said on Wednesday.

Fearing another case of mis-selling, Britain's parliamentary treasury select committee has asked the Financial Services Authority (FSA) to probe the sale of interest rate swaps, a derivative contract many businesses bought from banks.

With interest rates having been at historic lows for an extended period of time, thousands of small companies may be sitting on losses.

Martin Wheatley, head of conduct at the FSA, said he was focusing on the big four banks -- HSBC, Lloyds , RBS and Barclays -- who sold 95 percent of the swaps.

'We think there are a number of questions to answer,' Wheatley told the treasury committee on Wednesday.

The FSA will publish an update at the end of June.

'We hope to give an initial view of where those questions are and the way forward,' Wheatley said.

He will head the new Financial Conduct Authority from early 2013 to replace the FSA, with a specific remit to protect consumers in a bid to end Britain's history of mis-selling of financial products spanning more than two decades.



(Reporting by Huw Jones; Editing by Elaine Hardcastle) Keywords: BRITAIN FSA/SWAPS

(huw.jones@thomsonreuters.com)(+44 207 542 3326)(Reuters Messaging: huw.jones.thomsonreuters.com@reuters.net)

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