The Financial Conduct Authority has fined the Royal Bank of Scotland and NatWest £14.5 million for advice failings around mortgage sales.
Two separate reviews by the regulator found that in more than half of the cases sampled, the suitability of the advice was not clear from the file or recording. The advice failings in the sales process included adequate affordability assessments, not properly advising customers on consolidating debt and not providing adequate guidance to customers on which mortgage term was best for them.
Only two of the 164 sales reviewed overall were considered to fully meet requirements. In the banks' own mystery shopping tests, in three instances advisers were found to have given views on the future movements of interest rates.
The regulator said that the banks failed to rectify the problem after earlier findings by its predecessor, the Financial Services Authority.
Tracey McDermott (pictured), director of enforcement and financial crime at the FCA, said: 'Taking out a mortgage is one of the most important financial decisions we can make. Poor advice could cost someone their home so it’s vital that the advice process is fit for purpose. Both firms failed to ensure that their customers were getting the best advice for them.
'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. This simply failed to happen in this case.'
The FCA added that there is so evidence of significant consumer detriment and noted that the banks agreed to settle early and receive a 30% discount on what would have been a £20.7 million fine.