Chief regulator thinks interest swaps compensation should be complete by April 2014
Compensation for interest rate swap mis-selling should be complete by April 2014, according to the chief executive of the Finacial Conduct Authority (FCA).
So far only £500,000 has been paid out for just 10 cases. Banks have taken on 2,800 staff to deal with more than 30,000 cases.
FCA boss Martin Wheatley said that "nobody wants this to drag on for years and years" and that while performance so far has been muted, "the year [from April] should be the outside time limit to complete". He noted that "that's quite a challenge to get to that".
After George Mudie MP compared the interest swaps mis-selling to PPI, Wheatley said that provisions for PPI compensation "were way, way below what was eventually paid out". He stressed that it's not the FCA's job to calculate what provisions should be.
Provisions made my different banks vary wildly. State-backed RBS has the most claims at 10,528, while Barclays faces 3,436. Yet RBS has set aside half as much.
Wheatley said that RBS may explain the reasoning behind the difference by the unequal complexity of the products that RBS and Barclays had sold.
While Mark Garnier MP was worried by the possibility of banks delaying compensation, Wheatley suggested that banks have an incentive not to. All compensation payments are subject to eight per cent interest, which will accrue until paid out.
The chief regulator said that "CEOs have all agreed by their actions that they will not force businesses into bankruptcy."