RBS response to mis-selling scandal slammed
Shadow business secretary Chuka Umunna branded the banks handling of the matter as “disgraceful” after it emerged the regulator first raised concerns about impropriety in 2011.
Writing on twitter he said: “The FCA raised concerns with RBS on mortgage sales in 2011- it’s disgraceful this was not immediately acted on.”
The FCA fined the bank £14.5m for failings in its advised mortgage process after two reviews of sales from 2012 found that in over half of RBS and NatWest cases the suitability of advice was not clear.
The shadow business secretary said the latest scandal to rock the banking industry provided further proof of the continued need of banking reform.
Umunna said: “Taking out a mortgage is the biggest purchase a consumer makes and, as such, the FCA findings into RBS are both shocking and disappointing.
“We still have some way to go in reforming our banking sector so it serves individuals and businesses – the real economy – properly.”
Tracey McDermott, director of enforcement and financial crime at 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.”
But whilst RBS accepted it had taken a year to retrain its staff it pointed out that the FCA had stated in their notice that there is no evidence of widespread detriment to customers.
Ross McEwan, RBS and NatWest chief executive, said: “Our customers have every right to expect the very best service when making this decision.
“It is clear that in the past the bank just didn’t get this right, 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.
“As a result we are now helping more customers than ever before to buy their new home, providing them with the very best support and advice when taking out their mortgage.
“Today’s notice shows that we still have challenges to face, but we are determined to take the steps needed to earn back our customers’ trust.”
But Warren Ruhomon, analyst at online financial firm finspreads.com, said that reputational damage caused by the latest scandal could be difficult to repair.
He said: “With RBS being a bank owned and paid for by the general public, it’s been particularly sensitive to the stream of scandals that have hit the sector over the last five years.
“The impact could be far higher than the fine (£14.5m) if we take into account the incremental damage done to RBS’s reputation in the public memory and with a government determined to be on the right side of public opinion about the banks.”
RBS said it would be writing to 30,000 customers who were sold mortgages during the period under review to invite them to raise any concerns about the advice they received.