The Royal Bank of Scotland has received yet another fine, this time it has been fined £14.5M by the Financial Conduct Authority (FCA) for failing to ensure that advice given to mortgage customers was suitable.
The FCA said that the fine for RBS and the NatWest reflected "serious failings" in their advised mortgage sales business. The firms failed to ensure that advice given to customers was suitable, according to the FCA. Two reviews of sales from 2012 found that in over half the cases the suitability of the advice was not clear from the file or call recording.
Customers were not advised properly over the affordability of mortgages, or the appropriate term of products being offered. Others were given poor advice when looking to consolidate their debts.
Tracey McDermott, director of enforcement and financial crime at the FCA is quoted by the Telegraph:
“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.The FSA initially drew the firms’ attention to issues in their mortgage advice process in November 2011. However, no effective attempts to remedy the problems were made until the end of September 2012.
Both firms failed to ensure that their customers were getting the best advice for them.
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 fine is of course paltry in terms of a bank the size of RBS, therefore one has to question whether it is in the slightest way effective in "managing" the future behaviour of banks.