Watchdog tells banks to speed up £3bn compensation process

The Financial Conduct Authority (FCA) said lenders look unlikely to meet the 12-month timetable of completing the redress process after it began in May this year.

It means some struggling firms, which were sold interest rate swaps and have already been waiting more than six months for the outcome of their case, will have to hold on for longer than expected.

The regulator has written to the chief executives of Royal Bank of Scotland, HSBC, Barclays and Lloyds urging them to increase the pace.

FCA chief executive Martin Wheatley has previously rebuked banks over the delays, saying they compounded the unfairness of selling a complex product to companies without an understanding of the risks, with many now struggling to make ends meet.

The Federation of Small Businesses has also called for a faster process, saying many businesses could not afford to wait.

Banks have set aside around £3bn to compensate customers.

The FCA’s latest update shows that despite delays, progress in making compensation has speeded up.

Last month, 32 offers had been accepted, totalling £2m. Now the figure stands at 125, with payouts adding up to £15.3m.

But the regulator said progress had been slower than expected. Banks had planned to send out more than 1,000 offers in October, but the total was closer to 800.

Most banks made more determinations than expected but one – which the regulator did not name – fell short because of “operational challenges”, the FCA said.

Royal Bank of Scotland has the largest number of sales in the review, followed by HSBC, Barclays and Lloyds.

The FCA said it was “frustrated” at the pace of the process which it had expected to be complete within a year.