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Banks on track to pay out on mis-sold products

BANKS have now paid out almost £797million to 5,732 small businesses who were mis-sold interest rate hedging products, with one month to go in their sales review.

The Financial Conduct Authority says all banks apart from RBS are on track to pay out affected customers as promised by the end of this month, though barely a quarter of the £3bn provided by the big banks has so far been paid out.

Less than a third of the 19,000 SMEs in the review have so far accepted offers, while 93 percent of all sales were found to be "non-compliant".

The FCA said: "Around 13,000 customers (80 percent) have already received a redress determination. Bank of Ireland and Co-op have now completed their case reviews, while other banks remain on track to provide a redress determination to all customers within 12 months of starting their reviews.

These banks are currently sending out more than 500 redress letters per week, and the customers who are still waiting should receive a letter in the next two to six weeks."

The regulator added: "We meet regularly with RBS, currently more than once a week, to monitor its progress against forecasts and to ensure that the quality of customer outcomes is not being compromised."

Scot Cowan, from specialist adviser Veritas in Glasgow, said 3,263 SMEs had been offered either no redress (1,971 cases) or an alternative hedging product (1,292 cases) which could reduce their redress sometimes to zero.

"I spoke to one business owner recently whose bank acknowledged that he had been mis-sold but insisted on offering him a replacement non-cap product, with no cash compensation," Mr Cowan said.

"That decision - based on a hypothetical assumption by his bank on what alternative product he might have purchased - robbed him of a potential £500,000 payout.

"We are calling for a right of appeal to be introduced -something which should have been built into the review from the start."

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