UK banks speed up payouts for mis-selling

The mis-selling of these sophisticated financial products is one of numerous scandals facing the banking sector. The payouts come on top of more than £20bn set aside by the banks to compensate customers mis-sold loan insurance.

The Financial Conduct Authority (FCA) said that £306m had been paid out by Britain’s biggest four banks - Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC - by the end of January.

That compared with £159m at the end of December. 2,092 firms had accepted compensation or alternative products, up from 1,040 at the end of December.

The products were designed to protect smaller companies against rising interest rates but when rates fell, they had to pay large bills, typically running to tens of thousands of pounds. Companies also faced penalties to get out of the deals, which many said they had not been told about. The FCA had ordered banks to begin paying compensation last May after saying there were serious failings in the way they were sold. It said that all four banks were on track to complete the compensation process within a year of the scheme starting, but urged firms that had not yet agreed to have their case reviewed in the scheme to do so.