Banks are taking too long to pay out billions of pounds in compensation over mis-sold interest rate swaps, the head of the Financial Conduct Authority watchdog said today.
There are 30,000 outstanding claims for policies designed to protect customers from rising interest rates, which saddled them with tens of thousands of pounds in extra payments when the Bank of England cut borrowing costs to record lows. Since May, when the FCA launched its full review of the mis-selling, just 10 payments totalling £500,000 have been made from a total of £2.5 billion in provisions among the UK’s four biggest banks.
Chief executive Martin Wheatley said many more cases were in the pipeline but admitted: “It is coming along more slowly than we wanted — we had hoped it would be substantially complete in six months. Clearly that won’t be the case.”
Wheatley said it was “too early to say” if banks would need to set aside more cash but added: “If you look at (PPI) payment protection insurance the original provisions were way below what was eventually paid out.”