Banks Must Speed Up Rate Swap Compensation, FCA’s Wheatley Says

Banks that improperly sold interest rate derivatives to small business are failing to pay out compensation quickly enough, said Martin Wheatley, the U.K.’s top financial conduct regulator.

The financial industry “is deceiving itself if it imagines that a total of 32 offers accepted, totalling 2 million pounds ($3.23 million), is adequate progress,” Wheatley, chief executive officer of the Financial Conduct Authority, said in prepared remarks for a speech in London.

British banks may end up paying billions of pounds for improper sales of swaps, according to analysts. It’s one of at least three improper selling scandals facing U.K. banks. Lenders have also had to pay out billions over payment-protection and identity-theft insurance products.

“A very good option in what is now a very fluid situation is to follow the positive lead set by some banks, by paying compensation in separate stages, effectively fast tracking compensation payments,” Wheatley said in the prepared remarks.

Royal Bank of Scotland Group Plc has more than 10,000 interest-rate swaps claims under review, more than the combined total for HSBC Holdings Plc, Barclays Plc and Lloyds Banking Group Plc, the FCA said in September.

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