The UK’s Financial Conduct Authority (FCA) has issued fines of £14,474,600 to RBS over “serious failings” in the way that the bank and its Natwest subsidiary sold products to customers.
Two reviews of sales in 2012 found that just two of 164 cases were found to meet requirements for giving suitable guidance. In more than half of calls, it was deemed “uncertain” whether appropriate advice had been given.
Issues raised by the regulators included a lack of affordability assessments, failing to consider the full extent of a customer’s budget when making a recommendation, failing to advise customers who were looking to consolidate debt properly and not advising customers on which mortgage term would be best for them. On several occasions, advisers gave personal opinions on how interest rates might change in the future, which could lead to borrowers making misinformed choices about their mortgage type.
“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,” said Tracey McDermott, Director of Enforcement and Financial Crime at the FCA.
“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.”
The initial fine proposed by the FCA was £20,678,000, but this was reduced by 30% following the bank’s agreement to reach a settlement at an early stage.
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