The FCA has fined Royal Bank of Scotland and NatWest £14,474,600 over serious failings in the way the banks provided mortgage advice.
In two sales reviews from 2012, the regulator says in over half the cases the suitability of the advice was not clear from the file or call recording.
Only two of the 164 sales reviewed were considered to meet the standard required.
The FCA says affordability assessments carried out by RBS and NatWest advisers failed to consider the full extent of a customer’s budget when making a recommendation. Bank staff also failed to advise customers properly who were looking to consolidate debt and did not advise customers what mortgage term was appropriate for them.
The regulator says although there is no evidence of widespread consumer detriment, RBS and NatWest are to contact around 30,000 customers who received mortgage advice to allow them to raise any concerns about the recommendations they received.
In mystery shopping exercises carried out by the lenders themselves, there were examples of advisers giving personal views on the future movement of interest rates.
The FCA says this was “highly inappropriate and may have resulted in the borrower being sold the wrong type of mortgage for them.”
The issues were first brought to light by the FSA in November 2011 following a review of branch and telephone sales.
Despite this, RBS and NatWest did not remedy the issues raised until September 2012.
FCA director of enforcement and financial crime Tracey McDermott says: “Poor advice could cost someone their home so it’s vital the advice process is fit for purpose. Both firms failed to ensure 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.”