Watchdog mauls banks over slow compensation

The City watchdog has fired a fresh shot across the bows of the banking industry over the snail’s pace at which small businesses’ mis-sold interest-rate swaps are being compensated.

The Financial Conduct Authority said business owners, many of whom have faced huge bills as a result of a product they were often pressured to buy alongside loans, are waiting “too long” for compensation.

Chief executive, Martin Wheatley, said: “Many small business owners have been waiting too long to find out if they were mis-sold and we are now eager to see people repaid as soon as possible.”

That marks a subtle change in emphasis to recent statements in which he said he was expecting the pace to pick up, without such a direct challenge to banks. Privately regulators are becoming increasingly frustrated at the time it is taking banks to deal with the controversy, which has seen at least some small businesses failing.

The latest figures showed banks paid out just £1.5m in compensation in September with 22 offers being accepted by customers. It brings the total they have paid out to only £2m since the regulator ordered a review of nearly 30,000 cases.

Separately, regulators in Switzerland said they were investigating foreign exchange trading amid concerns that banks have been manipulating the lightly regulated market.