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RBS and NatWest fined for mortgage advice failings

The Royal Bank of Scotland and NatWest are facing a large fine, after the City regulator, the Financial Conduct Authority, conducted a review that revealed “serious failings” in the advice being administered to mortgage customers.

The fine, which is just under £14.5m, will be issued to RBS after it was revealed that only two out of 164 mortgage sales analysed met the required standards. The fine will be issued to both RBS and NatWest.

The FCA has said that the firms failed to ensure that the advice given to mortgage customers was appropriate, after conducting two separate reviews in 2012, both of which showed that more than half of the cases analysed were not suitable.

In some cases customers were advised to inappropriately with regards to affordability and the terms of the products being offered. Others were advised poorly when looking at debt consolidation.

Director of enforcement at the FCA, Tracy McDermott, said: “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 purpose is fit for purpose.

“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 stated to take proper steps to put things right.

“Where we raise concerns we expect them to take effective action to resolve them without delay. This simply failed to happen in this case”.

Both banks agreed to settle the dispute at an early stage, with the offer a 30 per cent discount on the total fine of £20,678,000. RBS said that they have “completely overhauled” their mortgage sales process and that have retrained all of their mortgage advisers and accredited them on a new sales process.

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