RBS fined £14.5m for 'serious failings' in mortgage sales

Those pesky legacy issues just won't seem to go away, as RBS takes yet another hit from the regulators.

by Adam Gale
Last Updated: 30 Sep 2014

Royal Bank of Scotland has been hit with a £14.5m fine by the Financial Conduct Authority (FCA) for offering substandard mortgage advice. The fine would have been over £20m, had the group, which includes RBS and Natwest, not elected to take a 30% cut in exchange for settling early.

The FCA found that only two of the 164 sales it reviewed in 2012 met appropriate standards. In the other 162, it found problems including customers being advised to take out the wrong mortgage for them and advisers failing to take into account the full extent of people's budgets when making a recommendation.

When Ross McEwan took over as RBS boss in October last year, he must have known that moving on from the bailed-out bank’s troubled history wouldn’t be a quick process. Nonetheless, all these fines and penalties must be getting pretty old, pretty fast.

RBS has paid hundreds of millions of pounds in the last couple of years over matters ranging from manipulating the London interbank exchange rate (Libor) to allegedly breaching US sanctions against countries like Iran and Cuba, and it’s hardly out of the woods yet. The bank has allocated £1.9bn to cover possible fines and damages relating to mis-selling of mortgages and £3.2bn for mis-selling payment protection insurance.

While today’s news might bring a smile to the anti-bank brigade, it’s unlikely to cheer up officials at the Treasury. After all, it does have an 81% stake in RBS, meaning it’s effectively paying a fine to itself. Penalties like this only delay the day when it can offload the shares.

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