Royal Bank of Scotland and NatWest have been slapped with a whopping £14.4 million fine for “serious failings” in their mortgage advice standards.
The Financial Conduct Authority (FCA) reviewed mortgage sales from 2012 and found that just two of the 164 sales it looked at met the required overall standards of a mortgage sale.
Problems with the sales process included failing to consider a borrower’s budget when making recommendations, failing to properly advise borrowers who were looking to consolidate debt and not offering any advice on what sort of mortgage term may be most appropriate.
Doing nothing
Somewhat shockingly, concerns were actually raised about RBS and NatWest’s mortgage sales processes by the FSA, the FCA’s regulatory predecessor. But the banking giant did nothing.
As the FCA has said, this meant borrowers were placed at risk of being flogged inappropriate mortgages for an even longer period.
The final notice on the fine makes for damning reading, with the response from RBS and NatWest to the FSA’s concerns dismissed as “seriously inadequate”.
Indeed, any changes the lenders made to their mortgage sales process weren’t actually properly communicated to its sales advisers, with no training taking place. So while the banks could say they were making changes, in reality they meant nothing.
Tracey McDermott, director of enforcement and financial crime at the FCA, explained: “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.”
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Affected by poor advice?
The FCA says there is no evidence currently that these advice failings have caused “widespread detriment” to the banks’ customers.
However, around 30,000 people who received mortgage advice during the relevant period will be contacted directly, to give them the chance to raise any concerns they have about the advice they received.
Getting advice
There are some obvious problems with getting mortgage advice in a bank. For starters, the adviser can only sell you that bank’s mortgages, so while you might get the best deal they offer, you may be able to get a much better deal elsewhere. There is also an understandable level of distrust of bank advisers, as a result of the countless reports about the pressure advisers are put under to constantly sell, irrespective of how appropriate the product may be. That led to the PPI mess after all.
If you feel comfortable handling the mortgage yourself, you can compare the best deals using the lovemoney.com mortgage centre. And if you want to get some independent advice, covering the whole market, then we have mortgage advisers ready to help too.