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Banks still to settle mis-sold loan claims with SMEs

SOME 8,000 small businesses have accepted a redress offer for mis-sold complex loan products, with the total payout rising to £1.2billion, the Financial Conduct Authority has said.

But a further 8,000 SMEs are yet to accept offers from their banks relating to interest rate hedging products (IRHPs).

The FCA said 2,400 businesses had made claims for consequential losses, 600 of which had been paid an average payout of £1,700.

Campaign groups have complained that banks have set a very high legal threshold for recognising consequential losses over and above the eight per cent per year paid out as interest on IHRP payments.

The FCA said: "For most customers, given the economic context over the past years, this has represented a straightforward and fair alternative to putting together consequential loss claims. For many customers who were sold an IRHP more than five years ago, the cumulative interest payments will amount to more than 40 per cent of their basic redress payment.

"The banks have agreed to consider consequential loss on the basis of established legal principles in relation to claims in tort and for breach of statutory duty."

The regulator said all nine banks had now completed their sales reviews of customers who joined the review before March 2014 and had sent out 16,000 redress determinations to customers, 13,500 of which included a cash redress.

Nasar Zamir, principal of advisers Congruent Financial Partners, commented: "The FCA and the banks will claim victory, but the fact is that they still haven't actually completed the review, when less than half of offers have been accepted, and 6,500 victims are unhappy with their offers."

"Current offers for ­consequential losses are a disgrace, and bear no relation to the impacts from the banks pulling billions out of the cashflow of small businesses over many years."

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