A Fife company has netted a six-figure compensation payment from the Royal Bank of Scotland for a mis-sold loan.
The £127,544 payment significantly boosted the profits of the Kirkcaldy-based Fife Group.
The removals, self storage, serviced warehousing, training and commercial property operation reported a 5.1% rise in turnover for the year to July 30 2015 at £2.96 million.
Profit before tax was up by a disproportionate 26% at £789,559 owing to the exceptional payment.
Notes with the group’s accounts lodged with Companies’ House, state that the payment was a sum received in the form of RBS loan compensation.
It was later explained: “The company received compensation of £127,544 in respect of an interest rate hedging product sold to Fife Group Ltd that did not comply with FCA (Financial Conduct Authority) standards.”
For seven years until 2008 around 30,000 small firms were sold complex interest rate-hedging products, designed to protect them from rising rates.
In most cases it was not fully explained to the firms that if interest rates slumped, as they did after the financial crisis, the monthly payments would rise dramatically.
The FCA said 90% of these products were mis-sold, and it ordered banks to redress affected businesses.
It set up a scheme to compensate them overseen by independent assessors, often large accountancy firms.
Lenders have so far paid out £2 billion with average settlements totalling £160,000.
Fife Group managing director John Kilgour said: “We were sold a product by RBS which wasn’t suitable. We appealed it and the appeal came back in our favour.
“RBS then gave us the correct product and paid us back the interest that should not have been charged.”