Royal Bank of Scotland has been fined £14.47 million (€18.1 million) by the British markets regulator for giving clients poor advice on mortgages.
The Financial Conduct Authority faulted RBS for what it called “serious failings in their advised mortgage sales business” between June 2011 and March 2013, according to a statement by the London-based regulator today.
RBS and its NatWest network “failed to ensure that advice given to customers was suitable,” it said.
Chief executive officer Ross McEwan has been working to overhaul the 80 per cent taxpayer-owned bank since he took over in October, cutting assets and jobs while tackling past regulatory missteps.
RBS was fined $612 million for manipulating benchmark interest rates last year, in just one of past misconduct issues the bank has faced since its £45.5 billion government bailout in 2008.
“This was unacceptable and should never have happened,” Mr McEwan said in a separate statement.
“Today’s notice shows that we still have challenges to face, but we are determined to take the steps needed to earn back customers’ trust.” RBS shares were little changed at 366.50 pence at 12:12 pm in London.
They are up 8.5 per cent this year, making them the only major British bank to see gains in that period.
The bank, based in Edinburgh, imposed financial penalties on some senior executives following the FCA fine, said a person briefed on the matter who asked not to be identified because the details aren’t public.
The person declined to say if current or former managers were sanctioned. RBS moved to claw back money paid to the firm’s employees and cut bonuses for some executives after it was fined for manipulating the London interbank offered rate last year.
Chairman Philip Hampton said at the time that “thousands” of employees, mostly at the investment bank, faced bonus cuts.
The lenders failed to consider the full extent of a customer’s budget when making a recommendation for a mortgage, the FCA said today.
The watchdog carried out two reviews of sales and found that in more than 50 per cent of the cases the “suitability of advice was not clear.”
Only two of the 164 sales reviewed were considered to meet the standard required in a sales process, the regulator said.
Bloomberg
