HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc will pay partial settlements to small businesses over losses on improperly-sold interest-rate swaps to speed up the compensation process.
The three banks will pay back the purchase price of the products to customers first and later consider added losses they may have suffered, the Financial Conduct Authority said in a statement today. Barclays Plc hasn’t signed up to the agreement to split compensation payments.
The regulator ordered the four largest U.K. banks earlier this year to compensate clients after it found “serious failings” in reviews of product sales. The banks have paid back 15.3 million pounds ($24.6 million) as of the end of last month, the FCA said.
“Progress to this point has been slower than expected, but the latest figures show a significant pick-up from earlier publications,” the regulator said in the statement. The deal with HSBC, RBS and Lloyds will “simplify and speed up the process.”
British banks may end up paying billions of pounds for improper sales of swaps, according to analysts. It’s one of at least three scandals over improperly sold products facing U.K. lenders, who have also had to pay out billions over payment-protection and identity-theft insurance products.
“It is in Barclays’s interests as well as our customers to complete the review as soon as possible,” Barclays said in an e-mailed statement. “Where we have made mistakes, we will put them right.”
Lloyds is planning to double the number of redress claims it has resolved in November, the bank said in an e-mailed statement, while RBS said it is “prioritizing those businesses that are most in distress first.”
“Our recent decision to introduce ‘split payments’ is speeding up the process,” HSBC said in an e-mailed statement. It “means customers get redress that is due to them at the earliest opportunity, potentially months earlier than under the process for a single payment.”