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RBS fined £14.5m for mortgage advice failings 27 August 2014

The Royal Bank of Scotland (RBS) and NatWest have been fined £14.5m by the Financial Conduct Authority (FCA) for “serious failings in their advised mortgage sales business”.

The regulator imposed the fine after two reviews of mortgage sales in 2012 found the “suitability of the advice was not clear from the file or call recording” in over half of all sales reviewed.

The FCA said “only 2 of 164” sales reviewed showed the advice given met “the standard required overall in a sales process”.

Issues uncovered by the regulator included failure to consider customer budgets when dispensing mortgage advice, and lack of consideration for which mortgage product was most suitable for customers.

However, the FCA said the failures did not cause “widespread detriment” to customers. RBS has agreed to contact 30,000 consumers who received mortgage advice in the relevant period.

Tracey McDermott, director of enforcement and financial crime at the FCA said: “Taking out a mortgage is one of the most important financial decisions we can make. Poor advice could cost someone their home so it’s vital that the advice process is fit for purpose. Both firms failed to ensure that their customers were getting the best advice for them.

“We made our concerns clear to the firms in November 2011 but it was almost a year later before the firms started to take proper steps to put things right. Where we raise concerns with firms we expect them to take effective action to resolve them without delay. This simply failed to happen in this case.”

Responding to the fine, Ross McEwan, RBS and NatWest chief executive, said the failings were unacceptable.

McEwan said: “We have worked hard to put things right. When I joined the bank we completely overhauled our processes, and took all our mortgage advisers off the front line for an extensive period of time to get the training required.

“As a result we are now helping more customers than ever before to buy their new home, providing them with the very best support and advice when taking out their mortgage.

“Today’s notice shows that we still have challenges to face, but we are determined to take the steps needed to earn back our customers’ trust.”

Last month RBS posted profits of £2.65bn for H1 2014, the largest since its taxpayer bailout in 2008.



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