"Financing projects from £50,000 to £100 million"

City watchdog tells banks to compensate businesses faster

City watchdog tells banks to compensate businesses faster

The Financial Conduct Authority has ordered banks to speed up their compensation payments to victims of mis-sold interest-rate swaps.

The City watchdog said that business owners had been waiting too long for compensation from banks, which needed to act much faster.

It was revealed last month that around half of the 30,000 products reviewed as part of the rate-swap redress scheme were considered eligible for potential compensation measures.

Of these, only a tenth were identified as ‘Category A Sales’, meaning that the complexity of the product would require further calculations before an offer of redress could be made.

Of the remaining 13,700, most of which have outwardly contravened the regulator’s rules, compensation is expected to be offered before the end of the year.

However, current figures show that only 32 offers have been accepted altogether, with 22 business owners agreeing terms last month.

The FCA’s chief executive, Martin Wheatley, said that the redress rate would accelerate, but that banks had to sharpen their game, with affected parties already having faced hefty bills as a result of the mis-sold hedging products.

“Many small business owners have been waiting too long to find out if they were mis-sold and we are now eager to see people repaid as soon as possible,” he said.

“Whilst we are moving in the right direction, we expect to see the pace at which cases are resolved and redress paid quicken over the coming weeks.”

Victims of mis-selling are to receive compensation that should return them to the financial position they were in without the damaging effects of the mis-sold products, plus a healthy annual interest rate.

Banks have already set aside around £3 billion to cover the cost of compensation, which comes as a further blow following the vast sums paid out as part of the payment protection insurance (PPI) mis-selling scandal.

Monday, 07 October 2013 12:38
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