Banks slow pace of swaps mis-selling compensation

 
Harriet Green
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The Financial Conduct Authority (FCA) has put out its latest figures on its interest rate hedging products redress scheme.

Last month, a total of £598.4m had been paid of by the UK’s four largest banks to small businesses to which they mis-sold the complex products.

In the month, £116.4m was paid out, down from £175m in February.

4,573 businesses have now accepted payments from Lloyds, Barclays, HSBC and RBS, but the regulator says 1,400 customers are yet to opt in.

There are 13,400 businesses currently in the redress phase of the scheme.

The FCA demanded a review into almost 30,000 cases last May after finding serious fault with how banks sold interest-rate swap products. These were designed to insure small businesses against the risk of higher interest rates.

When rates fell, firms were left with hefty bills, usually running into the tens of thousands, along with (often previously unknown about) penalties to free themselves of deals.

Daniel Hall, managing director of All Square, comments in response to the update that it’s disappointing that about one in ten of the businesses sold the products aren’t being offered redress, despite banks admitting they were mis-sold.

It's important for them to know that that does not need to be the end of the road, as they can still challenge those decisions to make sure they get what they are really due.

He adds that litigation could be an option for some businesses, and highlights the impact of consequential loss, the bill for which could potentially reach £6bn for the banks involved.

The banks remain on track to provide a redress determination to all customers within 12 months of starting their reviews, says the FCA.