Request a Demo Today

Release Date: 27th August 2014

To access the original FCA document, click here.


The Financial Conduct Authority (FCA) has imposed a fine of £14,474,600 on The Royal Bank of Scotland and NatWest for significant deficiencies in their mortgage advice services. The penalties were levied following findings from 2012 that demonstrated more than half of the mortgage sales did not adequately reflect the suitability of the advice from available files or call recordings.

Key issues identified included inadequate affordability assessments that did not fully account for customers’ budgets, improper advice to customers considering debt consolidation, and failure to advise on appropriate mortgage terms. Out of 164 sales reviews conducted, only two met the required standards for a comprehensive sales process. Additionally, instances of advisers giving personal opinions on potential future interest rate movements were noted during the firms’ own mystery shopping exercises, which could have led to customers choosing inappropriate mortgage products.

The FCA highlighted that these failings persisted even after initial concerns were raised by its predecessor, the Financial Services Authority (FSA), in November 2011. The firms did not begin to effectively address these issues until the end of September 2012, despite assurances given in July 2012 that remedial actions were underway.

Tracey McDermott, the FCA’s director of enforcement and financial crime, stressed the critical nature of mortgage advice, as poor guidance could jeopardise a customer’s ability to maintain their home. She expressed disappointment over the delay in implementing necessary improvements following the FCA’s initial feedback, underscoring the expectation for firms to act swiftly when shortcomings are identified.

Although there has been no evidence of widespread detriment to customers due to these failings, the banks have committed to reaching out to around 30,000 customers who received mortgage advice during the problematic period to address any concerns about the guidance they were given.

The settlement was reached at an early stage, granting the firms a 30% discount on their fines, which otherwise would have amounted to £20,678,000.

This case serves as a crucial reminder to financial institutions about the importance of providing clear, appropriate, and well-documented advice in mortgage services. Firms are urged to maintain rigorous compliance with regulatory standards and to respond promptly and effectively to any issues identified by regulators, ensuring they uphold the integrity of the financial services market and safeguard consumer interests.

Back to the Dear CEO letter archives.