Banks behind schedule on swap scandal compensation

Figures released by the FCA show that as of the end of last month RBS had completed 61pc of its compensation reviews, versus a target of 70pc, while Lloyds was projected to have completed 89pc of its total, but had only reached 73pc.

One adviser to swap victims said the May deadline was seen as “aspirational” and many staff at the major banks working on the review process did not expect the redress scheme to meet the cut off date.

Last year, the FCA told lenders the compensation process was moving too slowly and warned it could fine banks if it believed they were holding up payouts to victims.

Nearly 19,000 small business customers of Britain’s major banks, as well as several smaller lenders, including the Co-op Bank and National Australia Bank, have taken part in the FCA-led scheme, which was set up following widespread outrage at the mis-sale of complex interest rate derivatives to SMEs.

According to the latest figures, 84pc of those eligible to use the scheme have applied to do so and of those to have their product reviewed 94pc have had the sale judged “non-compliant”.

Nearly £600m has been paid out so far in compensation to victims, though banks have put aside more than £3bn against the potential costs of the scandal.

On top of direct redress for the products, many customers could also receive payments for so-called “consequential losses”. However, working out the size of these compensation pay out has become mired in controversy over the way different banks are interpreting their obligations.

more