The FSA is investigating government-backed Lloyds Banking Group and RBS over poor complaints handling.
The regulator found evidence they were rewarding staff who put bonuses before the fair handling of customer disputes or whose senior managers took little interest in complaint resolution, the Financial Times reports.
The FSA has demanded five banks make change to the way they deal with complaints, after a report, triggered by record volumes of complaints about payment protection insurance, found some banks were encouraging poor complaint handling by paying staff bonuses to keep redress down to set levels.
UK BANKS have accumulated £100bn of exposure to Spain, Portugal and Greece, according to some analysts, the Daily Mail reports.
Research from Credit Suisse says Barclays Capital and RBS have the largest holdings in the three countries among UK lenders.
Markets have been reeling after a series of credit rating downgrades by Standard & Poor's over the past two days.
Greek government bonds were slashed to 'junk' on Tuesday, while Portugal's rating was lowered to A-. Yesterday, S&P poured fuel on the fire by lowering its rating for Spain, which has also been dogged by public debt woes, to AA from AA+.
EUROPEAN bureaucrats last night brushed aside the economic crisis and announced plans for an astonishing 6% budget increase, reports The Daily Mail.
With governments across Europe imposing swingeing austerity measures, critics last night said Brussels was ‘living in cloud cuckoo land'.
They pointed out the increase comes despite the fact auditors have refused to sign off the Commission's accounts for 15 years in a row because of concerns about fraud.
Interest rate outlook unchaged
FCA made demands last week
'Unsung' part of FSCS work