LONDON (Reuters) - Britain’s banks continue to make slow progress compensating small firms for mis-sold risky interest rate products and have paid out only 81 million pounds ($132 million) from more than 3 billion set aside, official data showed.
Britain’s Financial Conduct Authority (FCA) said on Friday the country’s top four banks expect to complete assessments of redress by June.
The pace of compensation did pick up last month, when banks paid out 65.9 million pounds, up from 13.3 million in October, the FCA said.
The regulator said 547 offers had been accepted by customers at the end of November, up from 125 a month earlier, and 2,600 redress assessment letters were sent out last month, signalling there will be a big rise in payouts this month.
The FCA ordered a review of nearly 30,000 cases in May after saying there were serious failings in the way banks sold interest-rate swap products that were designed to insure small businesses against the risk of higher interest rates.
When rates fell, firms had to pay large bills, typically running to tens of thousands of pounds, or faced big penalties to get out of deals.
Banks have paid out less than 3 percent of the amount they have set aside for compensation, prompting criticism that they are handling the claims too slowly.
The latest data also suggest average payouts are rising and banks will need to set aside more money for compensation, said Ian Gordon, analyst at Investec.
He said Royal Bank of Scotland (RBS.L) “appears to be materially underprovided” compared to rivals and will need to set aside at least 1 billion pounds more.
The FCA wants banks to complete compensation assessments by the end of May. It said Lloyds expects to complete that process by April, RBS and HSBC (HSBA.L) expect to complete by May and Barclays (BARC.L) in June.
The FCA data showed differing rates of progress in dealing with cases between the banks. HSBC has reached the “redress offer and acceptance” stage for 864 sales, compared with 629 at RBS, 450 at Barclays and 337 at Lloyds.
RBS has more claims under review than its big three rivals combined. It is assessing 6,926 cases, compared with 1,866 at Barclays, 1,925 at HSBC and 1,171 at Lloyds.
RBS has set aside 750 million pounds for compensation - half of the 1.5 billion at Barclays, which is the biggest provision of all the banks. HSBC has allotted 460 million pounds and Lloyds 400 million.
The payouts add to more than 17 billion pounds set aside by banks to compensate customers mis-sold loan insurance.
Reporting by Steve Slater; Editing by Mark Heinrich