Banks 'are stingy with mis-selling payments'

DACS, a small electrical systems business near Chester, is among the claimants. In 2008, it was losing money and had nearly run out of cash reserves when its bank, Lloyds, suggested an interest-rate swap for the overdraft

“The way the interest swap was sold to us was that interest rates could only go one way – up,” said the managing director, Jon Gray

When interest rates fell DACS was paying about £5,000 a month in interest for the swap. Mr Gray claims the interest payments placed significant financial strain on DACS and it didn’t get a fair hearing when it asked to stop making payments on the product. Lloyds has paid several hundred thousand pounds in compensation, but DACS has also made a claim for consequential losses.

Lloyds Banking Group said it does not comment on individual customers: “More than 50pc of our customers in the review [of interest-rate hedging products] have already settled their basic redress outcomes ... [Lloyds] is committed to settling redress with all remaining customers, including claims for consequential loss where these are upheld, as quickly as possible.”

The British Bankers’ Association said banks were on track to have told businesses the compensation they may be owed by the end of the month. “Additional claims for consequential loss are dealt with on a case-by-case basis and in accordance with guidance laid out by the Financial Conduct Authority,” it said.

The FCA said the scheme had reviewed 30,000 cases and returned almost £800m to 5,700 small businesses.

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