UK banks pay out $2.5 billion for swaps mis-selling 

uk banks

Britain’s biggest banks have paid out less than 40 percent of the 4 billion pounds ($6.4 billion) set aside to cover the mis-selling of complex interest rate hedging products, according to data from the financial regulator.

The mis-selling is one of a number of scandals involving British banks in the past five years and provoked a political and public backlash against an industry blamed by many for the financial crisis – during which the government spent 66 billion pounds of taxpayers’ money rescuing Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L).

The Financial Conduct Authority (FCA) last year ordered banks to review 29,500 cases for possible mis-selling after finding “serious failings” in how interest rate swaps were sold to small businesses.

Banks, however, dismissed more than a third of the cases, with customers deemed sufficiently sophisticated to have understood the products. More than half of those left under review were then offered alternative hedging products rather than full cash compensation.

The FCA said on Tuesday that 1.5 billion pounds in compensation had been paid out so far in 9,858 cases settled by Britain’s biggest four banks – Barclays (BARC.L), HSBC (HSBA.L), Lloyds and RBS.

The FCA data showed RBS has examined 7,353 cases in the review, far more than any other bank. HSBC has reviewed 3,160 cases, Barclays 2,902 and Lloyds 1,638. But RBS has set aside just 1.4 billion pounds to compensate customers, less than the 1.5 billion set aside by Barclays. Lloyds has set aside 580 million and HSBC 566 million.

Source: Reuters– UK banks pay out $2.5 billion for swaps mis-selling

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