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.”

PROMOTED VIDEO
Arts and Entertainment
One of the installations in the Reiner Ruthenbeck exhibition at the Serpentine Gallery
artCritics rally to defend Reiner Ruthenbeck's 'Overturned Furniture'
News
John Cleese is promoting his new book
people
News
A-list actresses such as Deepika Padukone get paid a tenth of what their male counterparts make per film
news
News
The Black Friday Vines that will destroy your faith in humanity
i100

Arts and Entertainment
The cast of Downton Abbey in the 2014 Christmas special
TV
News
Robbie Rogers: US former Leeds United footballer, 25, announced he was gay in February 2013, shortly after he left Elland Road. Rogers 'retired' after writing on his blog: 'I'm a soccer player, I'm Christian, and I'm gay.' Has since signed with Los Angeles Galaxy.
peopleUS footballer said he had hoped Michael Sam and Jason Collins coming out might have helped
News
ebooksNow available in paperback
Arts and Entertainment
Johnny Depp no longer cares if people criticise his movie flops
films
Arts and Entertainment
All in a day's work: the players in the forthcoming 'Posh People: Inside Tatler'
TVGrace Dent thinks we should learn to 'hug a Hooray Henry', because poshness is an accident of birth
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
art

Presents unwrapped, turkey gobbled... it's time to relax

Arts and Entertainment
Convicted art fraudster John Myatt
art

News
The two-year-old said she cut off her fringe because it was getting in her eyes
news
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

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game