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Interest rate swaps payouts hit £158m in December

Small companies hit by alleged mis-selling of interest rate swaps will meet with the FCA regulator Credit: Reuters

In December, redress payments to businesses affected by the interest rate swap mis-selling scandal reached £158.6m, according to Financial Conduct Authority.

Figures showed that Barclays, Lloyds and the Royal Bank of Scotland all surpassed their set targets for making these payments, while HSBC was behind its projection by 1%.

To date, these five banks have set aside about £3bn to meet the cost of compensating customers.

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Small firms to meet regulator over rate swaps payouts

Small companies hit by alleged mis-selling of interest rate swaps will meet with the FCA regulator today.

'Swaps' were policies sold to protect firms from the risk of soaring interest rates but with years of rock-bottom rates actually led to them losing out.

After a campaign last year, thousands of businesses were promised compensation but many have complained that banks are dragging their heels over the payouts.

More: What are interest rate swaps?

Charity claims bank is 'delaying giving its decision in the hope that we will go away'

Businesses criticise swaps compensation delay

Among those critical of the length of time banks have taken to pay compensation to those wrongly sold insurance products is campaign group 'Bully Banks'

In a letter to Vince Cable, Bill Haslam, of Bully Banks, said: "2,800 people have been employed by the banks to deal with (after the sophistication tests) 15,000 cases, I am only a non-sophisticated small businessman of course but this is five cases per person?

"Many of these people are on £900 a day, as these jobs have been heavily advertised, and presuming an average daily cost across the 2,800 recruited of £300 per day per person this is a staggering £840,000 per day.

"If we said that they had all been working on this for only three months (when we know in truth many have been on this for a year now) this would be a staggering £76 Million.

"And yet the FCA and all these clever people at the banks have only managed to payout a grand total of £500,000 in 14 months to ten firms that were mis-sold!"

FSB: 'We are quickly losing confidence in the banks'

The Federation of Small Businesses has said it is "quickly losing confidence" in the banks and the regulator over the mis-selling of complex financial products.

...the FCA [Financial Conduct Authority] has laid bare depressing figures which show that after five months only ten businesses out of over 15,000 currently in the process have been offered compensation.

What makes this even more disappointing is that 1,300 firms who should be offered redress straight away are still stranded in this inept compensation scheme.

We are quickly losing confidence in the banks and the regulator as this scheme remains unbelievably slow.

– John Allan, National Chairman, Federation of Small Businesses

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Banks begin paying compensation for mis-selling

Britain's markets watchdog said banks have started paying compensation for mis-selling of interest rate swaps and the bill is expected to increase rapidly over coming months.

The impact of the potential mis-selling. Credit: ITV News

The products 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.

The Financial Conduct Authority said in a statement on Wednesday that by the end of August 10 offers of redress had been accepted by businesses totalling £500,000.

Read: Rate swaps compensation starts

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