Shares in Royal Bank of Scotland fell 0.5% in early trading on Wednesday, after it was fined £14.5m for “serious failings” in the way it advised customers about mortgage loans, in another blow for the embattled bank.
The Financial Conduct Authority found a series of failings by the state-owned bank and its Natwest arm in its probe into mortgage sales made in 2012.
It found just two of the 164 mortgage sales it looked at met the standards required.
The financial watchdog said RBS failed to advise mystery shoppers properly on a number of counts, including not taking into consideration the full extent of a customer’s budget when assessing the affordability of a mortgage, failing to properly advise those looking to consolidate debt and not advising customers on what mortgage terms were appropriate for them.
Mortgage advisers at the bank ”were found giving 'highly inappropriate' personal views on the movement of interest rates that resulted in the wrong type of mortgage being sold to the customer".
The regulator found RBS also failed to adequately address the failings when concerns were raised with the FCA’s predecessor the Financial Services Authority.
Tracey McDermott of the FCA said:
“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.”
RBS avoided a higher fine of £20m by settling the matter at an early stage.
In addition to the fine, RBS will contact around 30,000 customers who received mortgage advice during the period to allow them to raise any concerns.