Royal Bank of Scotland and its NatWest business have been fined £14.5m by the Financial Conduct Authority (FCA) for “serious failings” in its mortgage sales business.
The city watchdog said it found that the firms failed to ensure that their advice given to customers was suitable.
Two reviews of sales from 2012 found that in over half the cases, the suitability of the advice was not clear from the file or call recording.
The issues with the sales process included affordability assessments, failing to consider the full extent of a customer’s budget when making a recommendation, failing to advise customers who were looking to consolidate debt properly and not advising customers what mortgage term was appropriate for them.
Only two out of the 164 sales which were reviewed were considered to meet the standard required overall in a sales process.
It was also found that in the firms’ own mystery shopping, there were examples of advisers giving personal views on the future movement of interest rates.
Commenting on the matter, Tracey McDermott, Director of Enforcement and Financial Crime at the FCA, 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 process 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 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.”