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Banks pay out £159m in interest rate swap redress

FCA figures show RBS is dealing with the most cases, at more than 9,000.

Banks have paid out a total of £159m in redress for interest rate swap misselling, the latest FCA figures show.

The figures are based on claims paid as at the end of December. Banks had paid out just £500,000 in claims by August, rising to £81.2m by November and £158.6m by December.

Last year the banks were ordered to review past interest rate swap business, with 18,700 cases to be reviewed.

Just 1,040 people have received redress while 672 have not been awarded redress. There are a further 7,500 customers in the redress phases.

The banks have agreed to offer customers 8 per cent interest on top of redress payments to compensate for the cost of being deprived of their money.

The FCA began a full review of interest rate swaps last January after banks were found to have missold hedging products to small and medium sized businesses.

The Royal Bank of Scotland has the most sales reviews to deal with tackling more than 9,000 cases.

Lloyds Banking Group is reviewing nearly 2,000 sales while Barclays and HSBC have around 3,000 cases each.

Banking consultant Mehrdad Yousefi says: “The true cost of the misselling is not the compensation but that companies have actually lost their livelihoods as a result. It is much more difficult to put a value on that impact. Given the variety of misselling scandals in recent years on would hope the banks know the scale of the problem and rectify it accordingly.”

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