During the period covered by the review, RBS UK Retail was the second largest provider of retail banking products and services in the UK, with approximately 2,200 bank branches and 15 million customers.
The multiple failings identified by the regulator include delayed customer response, poor quality investigations into complaints and shoddy correspondence, which only partially addressed the complaint and failed to explain the reason behind a rejection or acceptance of fault. The two banks also both failed to refer customers on to the Ombudsman, or explain their rights within an accepted 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 regulator’s investigation also revealed inadequate complaints handling training or guidance for bank staff on how to investigate a complaint. The bank’s management also failed to monitor complaints handling teams in branches or assess whether Treating Customer Fairly (TCF) requirements had been met.
Margaret Cole, the FSA’s managing director of enforcement and financial crime said: “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.”
Brian Hartzer, chief executive of UK retail, wealth and Ulster Bank at RBS Group, said: “We acknowledge the findings of the FSA investigation. It confirmed shortcomings in our routine complaint handling that we assessed in our own internal review and which we are committed to putting right.
“We recognise the importance of complaint handling for our customers and are focussed on addressing the root causes of complaints. Such is our determination to get this right for our customers that complaint resolution features as one of our Customer Charter commitments. “
Which? chief executive Peter Vicary-Smith said: “This is yet more evidence of the UK’s banks failing their customers.
“It appears that instead of taking complaints seriously, RBS and Natwest have been paying lip service to the process, delaying and inconveniencing their customers and systematically rejecting complaints they should have been upholding. They must be made to review the complaints they’ve unfairly rejected and, where appropriate, pay redress to customers who have lost out.
He added: “The fact that the banks in question are 83% owned by the taxpayer makes these failings even harder for customers to swallow.”
As a result of the thematic review, five banks have undertaken significant action to improve their complaint handling, said the FSA.The regulator 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 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 said it 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.
RBS and NatWest are both part of the RBS Group and their UK retail bank branch networks operate under the umbrella of RBS UK Retail with standardised complaint handling arrangements.
To see the full notice click here.
http://www.fsa.gov.uk/pubs/final/rbs_11jan11.pdf
