RBS fined £14.5m for failings in advice to customers
Royal Bank of Scotland is to pay a fine of £14.5m after it failed to address serious failings in its advice to mortgage customers for nearly a year after being alerted by the City regulator.
In one "highly inappropriate" case an employee warned that interest rates could soar to 5.5% while trying to push a five-year fixed rate home loan deal, the Financial Conduct Authority (FCA) found.
The findings do not apply to RBS subsidiary Ulster Bank.
The FCA's predecessor, the Financial Services Authority (FSA) first raised concerns about branch and telephone sales at RBS and its NatWest business in November 2011 but no proper response began until the end of September the next year.
It is the latest embarrassment for the state-backed lender after six previous fines in the last four years by the FCA or FSA and covers a period from June 2011 to as recently as March last year.
All of the senior management involved are understood to have suffered "financial penalties" from the bank, likely to mean bonus clawbacks.
Brian Hartzer was head of the retail arm of the lender until June 2012 when he left to return to Australia to work for banking firm Westpac.
In an interview at the time he told the Financial Times that he had "rebuilt nearly everything about the place" adding: "The core businesses are in a much better place than they were three years ago."
Mr Hartzer was succeeded by Ross McEwan, who temporarily suspended the lender's mortgage advice shortly after taking over in September 2012 when he became aware of the problems.
Mr McEwan succeeded Stephen Hester as chief executive of RBS – which is 80% owned by the taxpayer – in October 2013.
Responding to the FCA's findings yesterday, he said: "This was unacceptable and should never have happened.
"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."