Swap mis-selling victims to wait nine months for review

In a letter to customers seen by The Daily Telegraph, Royal Bank of Scotland said it anticipates the mis-selling review could take “up to nine months” saying the length of time is required “to ensure that we have completed a comprehensive review of each customer’s circumstances”.

Guto Bebb, the Conservative MP who has campaigned on behalf of swap mis-selling victims, said he was “very unhappy” that the review process could take so long.

“It is imperative that any businesses in this position are allowed to put their swap deal into a suspense account while the review is undertaken,” said Mr Bebb.

RBS is one of 11 banks to have signed up to the Financial Services Authority’s interest rate swap mis-selling compensation scheme. Barclays, Lloyds Banking Group, HSBC and Santander UK are among the other banks to have agreed to compensate customers.

In its first half results, RBS said that it had put aside £50m as an initial provision against the claims. However, Stephen Hester, the bank’s chief executive, admitted that this figure could increase. Barclays has made the largest provision, setting aside £450m to meet the claims, though swap experts expect the eventual cost for all the banks to be much higher.

The FSA scheme followed an investigation by The Sunday Telegraph that uncovered evidence of serious mis-selling of interest rate hedging products by all of the country’s main banks.

The FSA thinks as many as 28,000 businesses were sold interest rate hedges in the past decade, though the figure could be much higher.

In some cases, businesses that were sold the swaps to protect them against rate rises have been left with hundreds of thousands and even millions of pounds in extra costs that they say they were never warned about.