FSA fines RBS and NatWest £2.8m for poor complaint handling
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The Financial Services Authority has fined Royal Bank of Scotland and National Westminster Bank £2.8m for multiple failings in the way they handled customers’ complaints, responding inadequately to more than half the complaints reviewed by the FSA.
The FSA’s investigation found that there was an unacceptably high risk that customers may not have been treated fairly due to a number of failings within the banks’ approach to routine complaint handling, including, delays in responding to customers:
- poor quality investigations into complaints, with complaint handlers failing to obtain and consider all the appropriate information when making their decision;
- issuing correspondence that failed to fully address all of the concerns raised by customers and failed to explain why complaints had been upheld or rejected; and
- customers not receiving their Financial Ombudsman Service referral rights within the appropriate time period.
Of the complaint files reviewed by the FSA, 53% showed deficient complaint handling; 62% showed a failure to comply with FSA requirements on timeliness and disclosure of Ombudsman referral rights; and 31% failed to demonstrate fair outcomes for consumers.
The FSA’s investigation also found that:
the banks did not give complaint handling staff adequate training and guidance on how to properly investigate a complaint;
- the monitoring of complaint handling in branches and the management information produced was ineffective in assessing whether customers were being treated fairly; and
- the banks failed to ensure that complaint handlers properly reviewed complaints taking account of all relevant factors.
Margaret Cole, the FSA’s managing director of enforcement and financial crime says: “We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly. The failure of these two high street banks to deal adequately with complaints put consumers at unacceptable risk and the fine of £2.8m reflects this.
“The poor complaints procedure of RBS and NatWest came to light during our review of complaint handling in major banks. The review showed that banks need to make major changes to handle consumer complaints fairly and the FSA will continue to take appropriate action to ensure these changes are put in place.”
The failings in the complaints handling processes of RBS and NatWest were uncovered during the FSA’s review of complaints handling in the UK’s major retail banks.
“As a result of the thematic review, five banks have undertaken significant action to improve their complaint handling.
The FSA subsequently published a consultation paper on 30 September 2010 on changes to complaint handling requirements, which aims to increase the quality of complaints handling across the industry and increase senior management accountability for complaints.
RBS and NatWest have co-operated fully with the investigation, accepting the findings at an early stage and have agreed to make significant changes to their complaints handling arrangements.
The FSA has required RBS and NatWest to work with an independent skilled person to undertake an extensive review of all parts of their complaint handling arrangements. The FSA is also working closely with the banks to ensure that the changes will lead to effective improvements.
The firms agreed to settle at an early stage in the investigation and therefore qualify for a 30% reduction in penalty. Were it not for this discount the FSA would have sought to impose a financial penalty of £4m on the firms.
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Readers' comments (5)
Anonymous | 11 Jan 2011 10:29 am
If Nat West/RBS can't get it right, with people dealing with complaints as their sole job function, what chance has a one man band mortgage broker got?
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Anonymous | 11 Jan 2011 11:13 am
Perhaps then, as the culture of the organisation and the priorities and practices of the bank come from on high in the organisation, Mr Hester should pay the fine out of his exhorbitant bonus rather than have this sum deplete the profits of the bank.
We should no longer tolerate the atrocious attitude of the banks and really start voting wiith our feet, their exploitation of good customers to compensate them for their appalling lending in the past is an utter disgrace just to remmunerate the heirachy so well and the ordinary staff so badly who have to implement the weak management policies.
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Anonymous | 11 Jan 2011 11:39 am
So a government quango fines a taxpayer/government owned bank to keep people employed and pay for a christmas party. Who's the winners in all this?
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Anonymous | 11 Jan 2011 6:26 pm
If Margaret Cole had real intentions about dealing with poor complaint handling, RBS would be forced to stop selling all products to customers immediately. This would give plenty of time to sort out the complaints.
#
]The Compliance Director of RBS should be sacked and prevented from working in Financial SErvices ever again, along with the CEO
Until decisive action such as this is taken, Banks will continue to take liberties to everyones detriment except of course Banks profits and Directors bonuses.
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Anonymous | 11 Jan 2011 7:30 pm
I have no comment to make in relation to RBS or this specific enforcement action but I would comment on enforcement actions against banks in the context of "complaints" and against "state owned" banks in particular.
There are two issues that come from this:
Firstly, what is the point in employing a fine as the enforcement penalty against a state owned bank as, at the end of the day, it is the taxpayer, including those customers who may have had reason to have complained, who end up paying the fine. I do not see the logic or justice in such a course of action where their are other enforcement actions that could be taken which would have more effect, i.e. ordering a complete external review of all complaints within the last X years, ordering a review of all procedures and processes to ensure that they meet all regulatory requirements and are fit for pupose, and / or take enforcement action, including substantive fines, against approved persons;
Secondly, if enforcement is to include a fine then this, or at least a substantive proportion, should be awarded to FOS to allow them to meet the extra costs that they have incurred in dealing with complaints from dsgruntled bank customers.
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