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By Steve Slater
LONDON, Dec 6 (Reuters) - Britain's banks continue to makeslow progress compensating small firms for mis-sold riskyinterest rate products and have paid out only 81 million pounds($132 million) from more than 3 billion set aside, official datashowed.
Britain's Financial Conduct Authority (FCA) said on Fridaythe country's top four banks expect to complete assessments ofredress by June.
The pace of compensation did pick up last month, when bankspaid out 65.9 million pounds, up from 13.3 million in October,the FCA said.
The regulator said 547 offers had been accepted by customersat the end of November, up from 125 a month earlier, and 2,600redress assessment letters were sent out last month, signallingthere will be a big rise in payouts this month.
The FCA ordered a review of nearly 30,000 cases in May aftersaying there were serious failings in the way banks soldinterest-rate swap products that were designed to insure smallbusinesses against the risk of higher interest rates.
When rates fell, firms had to pay large bills, typicallyrunning to tens of thousands of pounds, or faced big penaltiesto get out of deals.
Banks have paid out less than 3 percent of the amount theyhave set aside for compensation, prompting criticism that theyare handling the claims too slowly.
The latest data also suggest average payouts are rising andbanks will need to set aside more money for compensation, saidIan Gordon, analyst at Investec.
He said Royal Bank of Scotland "appears to bematerially underprovided" compared to rivals and will need toset aside at least 1 billion pounds more.
The FCA wants banks to complete compensation assessments bythe end of May. It said Lloyds expects to complete that processby April, RBS and HSBC expect to complete by May andBarclays in June.
The FCA data showed differing rates of progress in dealingwith cases between the banks. HSBC has reached the "redressoffer and acceptance" stage for 864 sales, compared with 629 atRBS, 450 at Barclays and 337 at Lloyds.
RBS has more claims under review than its big three rivalscombined. It is assessing 6,926 cases, compared with 1,866 atBarclays, 1,925 at HSBC and 1,171 at Lloyds.
RBS has set aside 750 million pounds for compensation - halfof the 1.5 billion at Barclays, which is the biggest provisionof all the banks. HSBC has allotted 460 million pounds andLloyds 400 million.
The payouts add to more than 17 billion pounds set aside bybanks to compensate customers mis-sold loan insurance.
