Regulation  

Banks’ swaps redress surges to £158m

The amount paid in compensation by banks relating to mis-sold interest rate swaps as a result of a review by the Financial Conduct Authority passed £158m in December.

The amount of compensation paid by banks for mis-sold swaps was almost double the figure reported in November as previously sluggish pay-out processes finally pick up momentum.

New figures from the regulator revealed that 7,500 people in December were in the redress stage and of those, 5,200 have been completed including those where it was found that no redress was due.

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The £158.6m paid out in December is a significant rise from August, when figures were first published, and when just £500,000 was paid out. In November, banks paid out £81.2m.

The FCA has also urged a further 3,700 customers yet to opt-in to the review to do so “as quickly as possible”.

Over the next few months the banks will start sending out final reminders to customers to encourage as many as possible to participate, before the review is closed for new entrants.

The FCA oversees the scheme, but the assessments themselves are undertaken by the bank and independent reviewers, which sign them off and challenge any offers that are unreasonable.

The latest figures show the pace of the banks’ reviews is continuing to increase.

In April, FTAdviser revealed that deals brokered with major banking groups over the mis-selling of interest rate swap products were failing to generate redress for clients as banks are fighting compensation claims in court, according to a law firm acting for investors in a number of legal battles.

Jon Green, senior associate at law firm Clarke Willmott, previously said that based on his experience of a number of claims that his firm is acting for, banks had not yet paid out any compensation to small businesses.

Clive Adamson, director of supervision at the FCA, said: “Banks have picked up the pace since November; we asked that they focus their efforts on making far more rapid progress in assessing individual cases and crucially in providing redress.

“May remains the target for all offers to have been sent out and the banks involved are working towards that. Any affected business that has been invited to join the scheme and hasn’t, needs to act now so they can receive the redress they’re due.”