Brokers say Royal Bank of Scotland’s £14.5m fine for “poor mortgage advice” shakes consumer confidence in lenders and strengthens the case for using intermediaries.
The bank was fined after the regulator found serious failings in the way it provided mortgage advice relating to cases from 2012.
Two reviews found that only two of the 164 sales reviewed met the required standard, with the FCA saying affordability assessments carried out by RBS and NatWest advisers failed to consider the full extent of a customer’s budget when making a recommendation.
Examples were uncovered of advisers giving personal views on the future movement of interest rates.
Brokers have slammed the FCA for slapping the lender with a “pocket change” fine but believe it could dissuade borrowers from going direct to a lender for mortgage advice.
Your Mortgage Decisions director Martin Wade says: “Any time cases like these come out, where a lender has behaved in such an inappropriate way, it shakes consumers confidence in the lending community, many of whom have already been in trouble for PPI misselling and rigging Libor. What it does do is highlight the importance of proper mortgage advice, strengthening the case for using an intermediary.
“You then have the FCA handing down this fine, which is essentially pocket change for a company the size of RBS. I cannot see how that is a deterrent when they are making billions. It’s almost factored in as the cost of doing business.”
Chadney Bulgin mortgage partner Jonathan Clark says: “Given that these offences were pre-Mortgage Market Review, you would hope that RBS and NatWest have tightened up their systems and processes because it’s just not acceptable. As far as the fine is concerned, the figure of £14.5m may strike people as a hefty sum but anyone in the industry knows it is nothing to the likes of RBS.
“I do think it strengthens the argument for getting advice from a broker but, more importantly, it just goes to show the importance of sound mortgage advice wherever it comes from – be it in-branch or from an intermediary. These cases shake confidence and that helps no one at all.”