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Interest rate swap redress hits £482m

Major banks have paid out a record amount in redress for interest rate swap misselling in February taking total payouts to £482m.

The latest FCA data shows more than 1,000 consumers received £175.7m last month for missold swaps. It follows £147.7m paid out in January after a slow start when just £158.6m was paid between August and December last year. 

In February 1,338 customers were paid, compared to 1,052 in January. A total of 3,430 customers have now been paid since the redress scheme launched in August with 962 claims rejected.

At a Treasury select committee hearing last month, FCA chief executive Martin Wheatley admitted payments began slowly but have now started to pick up.

A total of 18,800 customers have now been contacted with 83 per cent opting in to the scheme.

The Royal Bank of Scotland has the most affected customers with 3,159 at redress stage.

HSBC has made redress offers to 2,181 customers, Barclays to 1,405 customers and Lloyds Banking Group to 953 customers.  Other banks account for 233 redress offers.

The regulator first raised concerns about the ways banks sold interest rate swaps in June 2012. The FCA carried out a review of 173 sales of interest rate swaps and found that over 90 per cent did not comply with regulatory rules.

As a result the banks agreed to review the sale of interest rate swaps, which are designed to protect consumers against increases in interest rates. Over 30,000 sales are being reviewed, covering sales dating back to 2001.

The banks involved in the interest rate swap review are Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander, Clydesdale and Yorkshire Banks, Co-op Bank, Allied Irish Bank and Bank of Ireland.

Swaps sales March 2014.jpg

Source: FCA

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