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Interest rate swap redress hits £1bn

Major banks paid out a record amount in redress for interest rate swap misselling in May, taking total payouts to over £1bn.

The latest FCA data shows banks paid out £261.6m to 994 customers last month. This takes total redress since payouts began in August to £1.1bn, with 6,726 customers compensated.

In April, 1,159 customers were paid £199.2m in compensation.

A total of 19,000 customers have now been contacted, with 86 per cent opting into the review.

All nine banks involved in the scheme have now completed their sales reviews of customers who joined the programme before March.

AIB, Bank of Ireland, Co-op, HSBC, Lloyds, Santander, and Clydesdale and Yorkshire Banks have met the FCA’s target by delivering redress letters to all but a handful of these customers by the end of May, within 12 months of starting their reviews.

Barclays and RBS will send out redress letters to the remaining customers – around 500 people between them relating to 700 sales – before the end of June.  

Since March 2014, around 800 customers have chosen to join the review and the FCA says these cases will be dealt with over the next few months.

The banks will also continue to assess customers’ claims for consequential loss.

Consequential loss relates to lost interest or profits. The FCA says 8 per cent interest per year is added to each redress offer, and that customers who can demonstrate losses of more than 8 per cent per year can submit a consequential loss claim.

The FCA has today published figures on consequential loss redress for the first time, which show 2,060 customers have submitted a claim. The banks have completed 400 assessments, and paid out £700,000 so far.

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