Blow for RBS as hit with €18m fine

Britain’s financial regulator has fined Royal Bank of Scotland for selling mortgages without checking if customers could afford them, undermining chief executive Ross McEwan’s efforts to repair the bank’s image.

The Financial Conduct Authority (FCA) said yesterday it had fined RBS, 81%-owned by the British government, £14.5m (€18m) for failing to ensure advice given to customers between June 2011 and March 2013 was suitable.

The mortgage failure is particularly embarrassing for Mr McEwan because, unlike other scandals to hit the bank, it happened on his watch. Mr McEwan was appointed to lead RBS’s retail division in August 2012 before becoming chief executive in October 2013.

“Taking out a mortgage is one of the biggest moments in our lives, and our customers have every right to expect the very best service when making this decision. It is clear that in the past the bank just didn’t get this right. This was unacceptable and should never have happened,” Mr McEwan.

RBS checks failed to consider a customer’s overall budget when deciding if they could afford a mortgage, the bank did not properly advise customers looking to consolidate debt, nor did it recommend the most appropriate mortgage terms, the FCA said.

The regulator said only two out of 164 sales it looked at met the required standard. RBS sold some 30,000 mortgages in the period under review.

Mr McEwan has vowed to make RBS, which lost £8.2m last year, the “best customer service-oriented bank in the UK”, but his efforts are being hampered by various ongoing investigations into past misconduct.

- Reuters