RBS Mortgages Advice Failures: Does it Affect You?
You may have seen recently that RBS have been fined almost £15 million for “serious failings” in the mortgage advice that they have been giving out to their customers.
That’s all well and good that they’ve been fined by the regulator for their diabolical showing when it comes to their customers’ best interests, but what does this mean for you, the general public?
We’ve decided to take a bit of a deeper look into the amount of people that have been affected by this, how you can find out if you’re one of the ones that has been affected, what the advisers were doing wrong, if you could be entitled to receive compensation and whether or not you should be concerned about having taken a mortgage out from either RBS or NatWest recently.
From June 1st 2011 to March 2013, both RBS and NatWest sold a combined 177,000 mortgages to their customers. Of these almost 200,000 mortgages, 30,000 were advised sales and it is these customers that are the ones that will have been affected.
The sales of 164 mortgages that were made during this time period were reviewed by the Financial Conduct Authority (FCA) and they found that only two of those customers were given the correct advice.
They did however, in their report, conclude that every one of the 30,000 customers who were sold a mortgage on an advised basis in that time period is almost certainly “at risk of not having received suitable advice”.
Am I Affected?
You may have been given the advice over the telephone or face to face, either way, you may have still been given the wrong advice. According to research, 87% of the affected sales were made in a branch.
If this was you, you should expect to receive a letter from either RBS or NatWest that will invite you to bring up and talk to them about any concerns you may have about the way that the mortgage was sold to you.
If you don’t receive a letter, or any correspondence from the banks, you can call the bank on 0800 678 1924 or you could even write to them at: Mortgage Case Handling Team, Mortgage Services, PO Box 12201, Birmingham, B2 2NA.
What Were the Advisers Doing Wrong?
Whether they were sitting down and going through the advice face to face with you, or if they were doing it over the phone, there was a lot of things that the advisers were failing to do.
One thing that advisers were required to do in order to perform a proper check was an affordability test. During these ‘tests’ instead of asking detailed questions, advisers were assessing outgoings using ONS stats on average household expenditure as well as information on the customer’s loan and their credit card borrowing.
The advisers were failing to check other things properly though, such as the customer’s budgets. This meant that things like travel and child care, that would have more than likely been missed, could have affected their ability to borrow.
One thing that it was found that a lot of the sales advisers were doing is giving out their own predictions on base rate movements and advising on products based on their not-so-accurate predictions. One adviser was even recorded as saying: “If we don’t increase rates with this double-dip recession, the economy is in dire straits. Rates will rise. If you take a two-year deal then rates will be higher after this period.”
According to the FCA report, one of the major causes of the majority of these problems was the bank’s IT systems. The systems used by the banks did not allow the advisers to properly record the results of the all-important “fact find”.
This is the process that is needed to be carried out by ALL mortgage lenders in order for them to properly determine the suitability and affordability of all of their products. One of the major flaws in the system that was being used at the time is that is used a text box that restricted the answers that could be given to a total of 500 characters.
Can I Be Compensated?
The FCA has, as we’re all aware, fined the bank close to £15 million, but they have stopped short of insisting that the bank must compensate their customers.
The reasoning behind this is down to the fact that, overall, while sales processes were almost all non-compliant, there was no extensive consumer detriment that has been discovered in their reviewing of the cases.
That doesn’t mean to say that there were no cases found as there were in fact five of these cases found. The fact that five of these cases were found, meant that these were cases where there had been improper advice given or the customer had received an unfair outcome.
The Financial Ombudsman Service (FOS) has recommended that anyone who is concerned about a mortgage sold to them on an advised basis during the period mentioned above should contact the banks using the details we provided above.
Should I Be Concerned?
Since March 2013, the bank is insistent that things have improved and chief executive, Ross McEwan has come out and said that the bank has been working hard on ensuring things were put right.
Speaking about the overhauling of the processes that were already in place when he joined the bank, Mr McEwan said: “When I joined the bank we completely overhauled our processes, and took all our mortgage advisers off the front line for an extensive period of time to get the training required,”
A promise like this will undoubtedly make any homeowners wary. Regardless of the fact that the FCA (formerly FSA) made the banks more than aware that they were concerned about their sales processes going as far back as 2011, both RBS and NatWest failed to take any action until late 2012.
It was between then and March 2013 that the banks started to, in dribs and drabs, pull their whole sales force and set about getting them retrained.
This scandal certainly had very little effect on the banks and it certainly didn’t stop them from going ahead with their mortgage sales and in the summer of last year, they made an announcement that they would be increasing their mortgage market share with a number of different things taking place including recruiting new mortgage advisers.