Banks are now making "far more rapid progress" in compensating small businesses mis-sold interest rate hedging products, the Financial Conduct Authority has said.

Campaigners are monitoring what proportion of the 18,700 small businesses in the review are offered significant redress, amid concern that the early pay-outs may not be typical.

The FCA said that 4,307 businesses had now been offered redress, 63% with a 'tear-up' of the original agreement and a further 20% with an alternative capped rate product.

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The 1,040 offers so far accepted include 872 with complete tear-up, and a total redress pay-out of £158.6 million, or an average £152,500 per business.

Settlements are now being offered at the rate of 2000 a month, and the FCA says the banks are on course to meet their target of sending out all offers by May, almost two years after the review was announced.

Clive Adamson, director of supervision at the FCA, said: "Banks have picked up the pace since November; we asked that they focus their efforts on making far more rapid progress in assessing individual cases and, crucially, in providing redress."

Jeremy Roe, chairman of campaign group Bully Banks, which has more than 2,000 members, said the outcomes of the first 4,307 cases decided had been "very positive" with more than 83% receiving significant redress.

But he added: "What is clear is that when you look at the decisions yet to be communicated (ratified) there is an opposite weighting - that is something which may change as we go forward and (bank) decisions are reviewed by independent reviewers and by the FCA."

Royal Bank of Scotland has 9194 cases in the review but only 2894 in the redress phase, while Lloyds, with a total of 1771 cases, has 1084 in the final stages.

Scott Cowan at Glasgow-based advisers Veritas Treasury said: "RBS is keen to get people into the assessment stage but we have a lot of clients who are at that stage but nothing is happening."

An RBS spokesman said: "Because we have the most customers, we have taken longer to go through the assessment stage, but we have got more offers through than anyone else."

Mr Cowan said that more than 3,600 businesses had yet to 'opt in' to the review - often because they had moved premises and received no letter from the bank - and they would be excluded by a proposed cut-off date.

More than 10,500 companies have been excluded from the review as "sophisticated" customers, though 96% of all the sales included in the review were "non-compliant".