A further 6,000 offers have been made though not yet accepted, suggesting the total pay-out will top £2 billion. Much of the remainder of the £3.75 billion set aside by banks for mis-selling interest rate hedging products (IHRPs) would go on "the costs of having to get out of these products (the payments customers would have made in the future), the costs of employing more than 3,000 people to carry out the exercise, and the costs of engaging independent reviewers to look at every case", the FCA said.
In all, almost 30,000 businesses were sold IHRPs, loans linked to derivatives or swaps designed to protect against rising interest rates, with a 92 per cent mis-selling rate, but over 10,000 firms were excluded by the banks from the review as allegedly "sophisticated" customers.
A further 60,000 SME loans which contain 'embedded swaps', and which according to the FCA penalise borrowers in much the same way as IHRPs, are outside FCA jurisdiction altogether, prompting calls from the Treasury Committee for government action.
The FCA said: "All nine banks have now completed their sales reviews of customers who joined the review before March 2014. AIB, Bank of Ireland, Co-op, HSBC, Lloyds, Santander, and Clydesdale and Yorkshire Banks have met our target by delivering redress letters to all but a handful of these customers by the end of May, within 12 months of starting their reviews. Barclays and RBS will send out redress letters to the remaining customers, around 500 customers between them relating to 700 sales, before the end of June."
However, campaign group Bully Banks said this week that in a survey of 400 of its 2,000 SME members, only 49 per cent of RBS customers had been made offers by late May, and yesterday adviser Veritas Treasury in Glasgow said that only 60 per cent of its RBS clients had been made offers.
A spokesman for RBS said: "We continue to work hard to process cases as quickly as possible and ensure that all those that were mis-sold these products get fair and reasonable redress."
The Herald has this week reported evidence from the Bully Banks survey, and from law firm Slater & Gordon which has advised 300 SMEs in the review, that banks have determined redress according to the size of claims rather than their merits, and that the FCA's independent reviewers have been inactive and box-ticking.
Lawyer Fraser Whitehead said in his experience that reviewers' presence in meetings had been "extremely expensive yet purely procedural".
The FCA began yesterday's release by stressing : "Every case is overseen and verified by an independent reviewer."
Simon Jaquiss, at specialist advisers QA Legal, said less than half of the offers made so far had been for "full tear-up" of the original agreement, raising serious concerns. "The substitution of replacement products appears in many cases to have been decided in the interests of purely saving money. Why insist otherwise on a replacement product the like of which has been massively mis-sold?"
Mr Cowan added that this type of redress was "having one toxic swap replaced with another slightly less toxic swap".
Bully Banks chairman Jeremy Roe has also protested that banks have been rejecting well-founded claims for consequential losses, prepared in some cases by eminent barristers.
Mr Jaquiss commented: "The level of where the legal test bar is placed appears to be very high, and unfathomable, and not at all aligned to true legal principles."
The FCA revealed yesterday that 2,060 claims for consequential loss had been made and 400 assessed with £700,000 paid out - an average £1,800 per claim.
It said banks were already paying eight per cent simple (not compound) annual interest on any redress payments to reflect lost opportunities, which often amounted to 40 per cent of the compensation being paid out. The banks considered additional claims according to "established legal principles" and their decisions were "assessed by independent reviewers".