It says that this is to ensure its alignment to the principles of Treating Customers Fairly and in response to the legal recommendations following the well publicised Court of Appeal Case – Wilson v Hurstanger.
RBS says it has committed to fee disclosure and will continue to work with financial introducers who charge their clients a fee for the intermediation and advice service that they provide.
In a letter to brokers, RBS UK business banking chief executive Steve Pateman says: “As a bank we are encouraging our business introducers to be transparent about the fees they charge their client. I believe this provides a clear message that we will work together to ensure that we do what is best for our customers.”
Compliance consultant Adam Samuel says that the move by RBS is significant. “RBS is stopping the payment of proc fees in commercial mortgage cases to avoid the risk created by Wilson v. Hurstanger of becoming liable to pay the commission to the client as well. That case allows proc fees so long as the customer knows that they are being paid and gives informed consent. RBS does not propose to take the risk. “
Samuels points out that this move is similar to when Winterthur introduced factory gate pricing for investment products.
He says: “It has the benefit of reducing proc fee bias. This letter only applies to business cases anyway but it’s a good way to start weaning mortgage intermediaries off proc fees and the bias and conflict of interests that they produce.”
A spokesman for RBS Intermediary Partners says the move is not associated with RBSIP. “This is in relation to the business banking arm. Natwest is still selling buy to let mortgages and is still paying procuration fees.”