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By Huw Jones
LONDON, Nov 14 (Reuters) - The full bill Britain's banksmust pay for mis-selling interest rate swaps won't be known forsome time, with lenders still not handling claims fast enough, atop regulator said.
Martin Wheatley, chief executive of the Financial ConductAuthority (FCA), said the bulk of the 3 billion pounds ($4.8billion) banks have set aside so far for compensation is forredress for the amounts actually paid for the products.
Banks have yet to set aside any large amounts for so-calledconsequential losses, Wheatley said.
Those claims would effectively set the clock back to thepoint before the products were sold and would require banks tocompensate not just the direct cost of the mis-sold contractsbut any losses that businesses have suffered as a result ofentering the agreements.
That could include missed opportunities for firms to expandbecause they were tied into crippling monthly repayments on theswaps. The products were meant to protect companies againstrising interest rates but, when rates fell, they had to paylarge bills, typically running to tens of thousands of pounds.
Wheatley said it was unclear if the full bill for interestrate swaps would be of a similar size to the 17 billion poundsset aside so far for mis-selling loan insurance.
"There is more uncertainty about consequential loss ... it'smore complex and will take longer. It's hard to predict whetherit will be bigger or not," Wheatley told Reuters on thesidelines of a CFA Institute conference.
Britain's regulators, in particular the PrudentialRegulation Authority, is taking a harder line on bank capitallevels because of the seemingly unending bills for misconduct.
An open-ended bill for interest rate swaps will add to thatuncertainty, as will investigations by the FCA and otherwatchdogs into possible manipulation of currency markets.
The FCA has begun publishing monthly statistics on interestrate swaps compensation and earlier this month Wheatleycriticised lenders for being slow to pay compensation.
He said on Thursday that payouts were still too slow.
"The last month we published the third set of figuresshowing a significant pickup but there are lots of smallbusinesses affected so we still want the banks to pick this upfaster and move it on," Wheatley said.
HSBC, RBS and Lloyds have recentlyagreed to make initial payments to customers before possibleclaims for consequential losses are assessed. Barclays has saidit will make decisions on a "case-by-case" basis in order tosupport customers in financial distress.
