This follows on the back of an investigation by the regulator, which identified failings in the way some banks sold IRHPs in 2012. All nine banks were put under a full review in May 2013 and have now completed their sales reviews of customers who joined before March 2014.
"The IRHPs are contracts of difference sold alongside loans sold to small businesses, in order to ultimately reduce exposure to interest rate rises," according to a FCA spokesperson.
"The problem was that these were sold to unsophisticated small businesses with no expertise in these products or access to specialist advice. They were paying a steep price even when interest rates fell, compounded by a stiff exit fee."
The banks sent out 15,000 redress determinations to customers. Of these letters, 13,000 include a cash redress offer and 2,000 confirm that the IRHP sale complied with our rules or that the customer suffered no loss.
Every redress offer has 8% simple interest per year added which is intended to compensate customers for the lost opportunity cost of being deprived of their money. To date, 7,000 customers have accepted a redress offer and £1.1bn is being paid out.
For many customers who were sold an IRHP more than 5 years ago, the cumulative interest payments will amount to more than 40% of their basic redress payment, the regulator said.
According to the FCA, AIB, Bank of Ireland, Co-op, HSBC, Lloyds, Santander, and Clydesdale and Yorkshire Banks have met the target. Meanwhile Barclays and RBS will send out redress letters to the remaining customers.
