UK regulator urges banks to speed up swaps mis-selling compensation

Banks have so far handed out only £15.3m of the £3bn set aside for compensation, the Financial Conduct Authority says

Britain's financial regulator has written to the bosses of the country's biggest four banks to tell them to speed up the process of compensating small firms mis-sold complex hedging products.

Banks have paid out only a tiny fraction of the £3bn they set aside for compensation, data from the Financial Conduct Authority (FCA) showed on Thursday.

The banks have so far handed out £15.3m, with 125 offers accepted by customers. The regulator ordered a review of nearly 30,000 cases in May, having identified serious failings in the way the products were sold.

The FCA said on Thursday that progress in paying out compensation had been slower than expected but that there had been a significant 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 would not meet the deadline, so it has written to the bosses of Royal Bank of Scotland, Lloyds Banking Group, Barclays and HSBC to make its expectations clear and agree practical ways to speed up the process.

The interest rate swaps 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.

Article Source : http://www.guardian.co.uk
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