Royal Bank of Scotland fined £14.5m over unsuitable mortgage advice

City watchdog said only two of the 164 sales it reviewed between June 2011 and March 2013 met sales standards

State-backed Royal Bank of Scotland paid bonuses to its worst mortgage advisers and made just two compliant sales out of 164 reviewed between 2011 and 2012, the City watchdog said today as it levied a £14.5 million fine on the lender.

In a damning indictment of the bank and its subsidiary NatWest, the Financial Conduct Authority found that the most-risky salesmen could still receive bonuses even if all sales reviewed in a quarter by quality control staff were graded “non-compliant”.

The watchdog also found “no individual or team” had overall responsibility for mortgage advice, citing this as one of the major reasons that it took almost a year for improvements to be made from when the FCA’s predecessor, the Financial Services Authority, raised concerns in November 2011.

Salesmen even gave clients their own views on how interest rates would move. Asked if rates would rise, one said “yes absolutely” before warning that they could hit 5.5 per cent.

Recommending a five-year fixed mortgage, the adviser said: “If we don’t increase rates with this double-dip recession the economy is in dire straits. Rates will rise. If you take a two-year deal then rates will be higher after this period.”

More than two years later, rates remain at a historically low 0.5%. The salesman was ultimately de-authorised after being exposed by a mystery shopping exercise.

Such exercises revealed a catalogue of failings, with an RBS review finding two compliant sales out of 91 assessed while a further appraisal of 73 carried out by a consultant found not a single sale met compliance guidelines.

The FCA also found widespread problems with the bank’s IT systems. For example, advisers were restricted to just 500 characters in a text box to record the result of customer fact finding so they could assess the affordability of loans.

As a result of its failings, the bank will now have to write to 30,000 clients who may have been mis-sold loans.

FCA director of enforcement Tracey McDermott said treating customers fairly was of “critical importance”.

“Where we raise concerns with firms we expect them to take action to resolve them without delay,” she said.

RBS chief executive Ross McEwan took over retail at the bank in August 2012 a month before it finally addressed the issues. He said: “It is clear that in the past the bank just didn’t get this right. This was unacceptable.”

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee