BANKS have increased the pace of granting compensation to small businesses over allegations that they were mis-sold complex financial products, with pay-outs reaching £158.6m in December.

It means the total nearly doubled in just a month, after standing at £81.2 million at the end of November, according to figures from the Financial Conduct Authority (FCA).

However the figure represents just a small proportion of the £3bn set aside by major lenders so far to cover the costs of making redress to victims - though that figure will also include the expense of administering the scheme.

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The FCA has previously written to the chief executives of Royal Bank of Scotland, HSBC, Barclays and Lloyds urging them to increase the pace of compensation for the interest rate swap products.

Martin Wheatley, head of the City regulator, has said the delays compound the unfairness of selling a complex product to companies without an understanding of the risks, leaving many struggling to make ends meet.
But the FCA adopted a more positive tone when it issued its monthly update on the scheme today.

It said a total of 1,040 offers of compensation had been accepted by customers by the end of December, up from 547 in November.