Rate swaps compensation starts

Among those critical of the length of time banks have taken to pay compensation to those wrongly sold insurance products is campaign group 'Bully Banks'

In a letter to Vince Cable, Bill Haslam, of Bully Banks, said: "2,800 people have been employed by the banks to deal with (after the sophistication tests) 15,000 cases, I am only a non-sophisticated small businessman of course but this is five cases per person?

"Many of these people are on £900 a day, as these jobs have been heavily advertised, and presuming an average daily cost across the 2,800 recruited of £300 per day per person this is a staggering £840,000 per day.

"If we said that they had all been working on this for only three months (when we know in truth many have been on this for a year now) this would be a staggering £76 Million.

"And yet the FCA and all these clever people at the banks have only managed to payout a grand total of £500,000 in 14 months to ten firms that were mis-sold!"

The Federation of Small Businesses has said it is "quickly losing confidence" in the banks and the regulator over the mis-selling of complex financial products.

• Read: Rate swaps compensation starts

Britain's markets watchdog said banks have started paying compensation for mis-selling of interest rate swaps and the bill is expected to increase rapidly over coming months.

The products were designed to protect smaller companies against rising interest rates but when rates fell, they had to pay large bills, typically running to tens of thousands of pounds. Companies also faced penalties to get out of the deals, which many said they had not been told about.

The Financial Conduct Authority said in a statement on Wednesday that by the end of August 10 offers of redress had been accepted by businesses totalling £500,000.

Read: Rate swaps compensation starts

The FCA says it expects rate swaps compensation offers to increase rapidly in coming months with 210 offers already sent to customers, with 1,700 due shortly.

The UK Financial Conduct Authority says 10 offers of redress for interest rate swaps mis-selling were accepted by the end August, totalling £500,000.

• Read: Insurance policies: Another mis-selling scandal?