RBS fined £14.5 mn over “serious failings“ in advice to mortgage customers
27 August 2014
State-backed lender, Royal Bank of Scotland has been fined £14.5 million after the financial services regulator found "serious failings" in its advice to mortgage customers, The Guardian reported.
According to the Financial Conduct Authority (FCA), only two of the 164 sales it reviewed between June 2011 and March 2013 were considered to meet the standard required overall in a sales process.
The regulator found RBS and its retail arm NatWest did not take into account the full extent of a customer's budget when making a recommendation, while staff failed to advise customers what mortgage term was appropriate for them.
According to the regulator, there was no evidence of widespread detriment to customers, although RBS and NatWest would contact 30,000 consumers so they could raise any concerns they had about the advice they received.
According to RBS, in response to the regulator's findings at the end of 2012, it had overhauled its mortgage sales process and retrained all mortgage advisors.
The FCA's predecessor, the Financial Services Authority, raised concerns in November 2011 about branch and telephone sales at RBS and NatWest, however, it was almost a year later before the firms started to taking steps to set things right.
Tracey McDermott, director of enforcement and financial crime at the FCA, said where the authority raised concerns with firms it expected them to take effective action to resolve them without delay. She said this simply failed to happen in this case, Mailonline reported.
She added, taking out a mortgage was one of the most important financial decisions one could make and poor advice could cost someone their home so it was vital that the advice process was fit for purpose. She said both firms failed to ensure that their customers were getting the best advice for them.
According to Ross McEwan who ran the RBS retail unit from August 2012 until his promotion to group chief executive in October last year, the mortgage advice failings were 'unacceptable and should never have happened'.
He added, the authority had worked hard to put things right. He said when he joined the bank the processes were completely overhauled and the bank took all its mortgage advisers off the front line for an extensive period of time to get them trained afresh.