The FSA has fined RBS subsidiaries Direct Line Insurance and Churchill Insurance Company £2.2m for altering customer complaint files before passing them to the regulator to be reviewed.
Royal Bank of Scotland is responsible for paying the fine, which is the second fine within a year for the group after RBS and NatWest were fined £2.8m for poor complaint handling last January.
The latest fine relates to 50 closed complaint files submitted to the FSA for review. Out of the 50 files, 27 had been altered before being passed to the FSA. A further seven internal documents contained staff signatures forged by a member of staff.
The FSA reviewed Direct Line and Churchill’s complaint-handling process in May 2009 and highlighted areas to improve. In February 2010, the FSA planned a second review and requested a list of general insurance complaints closed between February 1 and March 31 2010, from which the FSA would select a sample to review.
Ahead of the FSA review, Direct Line and Churchill asked a major accountancy firm to review 110 closed complaint files, with 28 per cent of the files failing the review. The firms’ customer relations management then held two conference calls with 200 staff. Staff were told to “think about what they could do in the next eight working days to ensure the files were of an acceptable standard” and said anyone found not to be working to the required standard would face disciplinary investigation.
FSA acting director of enforcement and financial crime Tracey McDermott says: “This is a serious breach. The firms’ attempt to ensure that complete files were provided to the FSA backfired.”
Plan Money director Peter Chadborn says: “This sounds like line management at its worse. People may say the fine is insignificant but it is the naming and shaming which does far more harm to RBS’s reputation.”