11 January 2011
The Financial Services Authority (FSA) has fined Royal Bank of Scotland (RBS) and National Westminster Bank (NatWest) £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 (Ombudsman) 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 said:
“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.
Notes to editors
1.The Final Notice for RBS and NatWest can be found on the FSA website.
2.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.
3.The investigation into RBS and NatWest complaints handling arrangements related to routine and non-complex complaints received by the bank branch network. It did not concern complaints relating to payment protection insurance, bank charges, correspondence to the Ombudsman and complaints concerning life insurance, pensions and investments. The complaints files reviewed dated from H1 and H2 2009.
4.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.
5.Between September and December 2009, the FSA undertook a review of complaint handling at RBS UK Retail as a part of a wider review of complaint handling in major banks, the findings of which were set out in the FSA report entitled Review of complaint handling in banking groups published in April 2010.
6.The FSA has undertaken a programme of work to drive improvement in the quality of firms’ complaint handling and poor complaint handling has also been identified as a key conduct risk in the Financial Risk Outlook (FRO) 2009 and 2010. As a part of this programme the FSA published a Consultation Paper on 30 September last year on changes to complaint handling rules.
7.The FSA has also increased transparency on complaint handling through new rules requiring firms to publish their own complaints data every six months. Firms published their first complaints data summaries at the end of August 2010 and the FSA published consolidated firm-specific data at the end of September 2010 to enable firms' performance to be compared across their peer group.
8.The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
This article first appeared on the FSA website.
No comments:
Post a Comment