Britain’s biggest banks have upped the pace of compensation to small firms mis-sold complicated interest-rate hedging products, but have still paid out only five per cent of the £3bn they have set aside.
The Financial Conduct Authority (FCA) said today that £158.6m had been paid in compensation by Britain’s biggest four banks - Lloyds, RBS, Barclays and HSBC - by the end of December, compared with £81.2m at the end of November.
A total of 1,040 offers of compensation had been accepted by customers at the end of last month, up from 547 at the end of November.
“Banks have picked up the pace since November; we asked that they focus their efforts on moving far making far more rapid progress in assessing individual cases and crucially in providing redress,” said the FCA’s director of supervision, Clive Adamson.
The FCA ordered a review of nearly 30,000 cases last May after saying there were serious failings in the way banks sold interest-rate swaps, designed to insure small businesses against the risk of higher interest rates.
When rates fell, firms had to pay large bills, typically running to tens of thousands of pounds, or face big penalties to get out of deals.
Adamson said banks were continuing to work towards a target of paying compensation to all affected customers by May and urged small firms who have yet to join the compensation scheme to do so.
Most of the products were sold prior to the 2008 financial crisis and small firms face a six-year limit to seek compensation under UK laws.