Britain\'s major banks, including HSBC and Barclays, were ordered on Friday to pay up for misleading businesses over interest rate insurance, in a second blow to the image of the City. The regulator said that the culprits were guilty of \"serious failings\", and in a broader attack Bank of England governor Mervyn King told the British banking sector to wake up to a need for a \"real change in culture\". His comments came after the Financial Services Authority (FSA) said it had reached agreement with Barclays, HSBC, Lloyds and Royal Bank of Scotland \"to provide appropriate redress\" for mis-selling interest rate hedging products. The targeted banks issued statements stating that the compensation due would have little impact on earnings. Far worse for Barclays, which has seen its shares hammered this week, was expected to be the fallout from record fines imposed on the bank for rigging interest rates. Also this week, a severe IT meltdown at bailed-out Royal Bank of Scotland left millions of customers unable to complete transactions. \"We can see we need a real change in the culture of the (banking) industry. And that will require two things. One is leadership of an unusually high order and changes to the structure of the industry,\" BoE Governor King told a press conference. Earlier, the FSA said in a statement that it had \"found serious failings in the sale of interest rate hedging products to some small and medium-sized businesses.\" It added: \"We believe that this has resulted in a severe impact on a large number of these businesses. \"In order to provide as swift a solution to this problem as possible we have today confirmed that we have reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate redress where mis-selling has occurred.\" It was a second major blow for Barclays in just a few days, with the bank on Friday remaining under intense pressure over being fined for rigging interest rates that affect businesses worldwide. Shares in Barclays plunged by as much as 17 percent on Thursday, wiping billions of pounds from its value, as Prime Minister David Cameron and finance minister George Osborne said the bank had \"serious questions\" to answer. So far Barclays has ignored calls for chief executive Bob Diamond to resign ahead of an appearance by the US national before British deputies likely next week to explain the inter-bank rates rigging scandal. British and US authorities on Wednesday said they had fined Barclays a total $452 million (363 million euros) amid probes into suspected manipulation by several banks of key markets for Libor and Euribor interest rates. Barclays is the first major financial institution to settle with regulators following investigations on both sides of the Atlantic. The rates concerned play a big role in international financial markets, and are linked to the level of borrowing costs passed on by banks to businesses and consumers for products such as mortgage loans. Anticipating a backlash over the rates rigging fines, Diamond and other senior executives at Barclays said they would forego their annual bonuses due for their work in 2012. Ed Miliband -- leader of Britain\'s main opposition Labour party -- has meanwhile called for a criminal investigation into the affair. \"With law suits and criminal charges likely, and other banks set to agree settlements in the coming months, this issue is not going away soon,\" said Rebecca O\'Keeffe, Head of investment at Interactive Investor. \"Barclays has a long way to go to reassure its customers and investors that its culture has changed,\" she added in a note to clients on Friday. The rates rigging scandal is another massive blow to Britain\'s embattled banking sector after huge bailouts in the wake of the financial crisis -- and as lenders continue to massively compensate clients for mis-selling insurance.