RBS fined £2m by watchdog

THE Financial Services Authority (FSA) has issued a £2.17m fine to Direct Line and Churchill Insurance – both owned by Royal Bank of Scotland (RBS) – after the firms tampered with files in an attempt to pass an inspection.

The FSA asked to review fifty customer files in April 2010 as part of an investigation into the standard of complaint handling in the insurance industry. But investigators swooped on the insurers’ offices following a tip-off that files may have been altered prior to submission.

They discovered that 27 of the 50 files received for review had been amended and also found documents featuring seven staff signatures that had been forged by a single employee.

No customers were affected by the changes but the FSA charged the firms with failure to conduct their business with “due skill, care and diligence”.

Direct Line and Churchill employees had been told to ensure that files were “in a state that would pass FSA inspection” prior to submission and warned “staff found not to be operating to the required standard would face disciplinary investigation”.

Since the breach both Direct Line and Churchill have been transferred to UK Insurance Limited, a subsidiary of RBS. As a result RBS are responsible for paying the fine in full.

Paul Geddes, chief executive of RBS Insurance, said: “We are very disappointed that we did not meet the standards we expect of ourselves and which the FSA expects of us.”