Watchdog tells banks to hurry compensation

City A.M. Reporter
THE CITY watchdog has written to the bosses of the country’s biggest four banks to tell them to speed up compensating small firms mis-sold risky products designed to insure them against rising interest rates.

Banks have set aside some £3bn for compensation payments in this area, but have so far handed out just £15.3m, or 0.5 per cent of the total, data from the Financial Conduct Authority (FCA) showed yesterday.

The regulator, which said only 125 offers had so far been accepted by customers, had ordered a review of nearly 30,000 cases in May having identified serious failings in the way the products were sold. The FCA said yesterday payment of compensation for mis-sold interest-rate products had been slower than expected, despite a pick-up in October.

“We gave the banks six to 12 months to complete their reviews from the start of the process and are frustrated that they are all expecting to meet the lower end of our expectations,” the FCA said on its website. The regulator said current trends suggested banks will not meet the deadline, so it has written to the bosses of RBS, Lloyds Banking Group, Barclays and HSBC to make its expectations clear.