Britain’s independent financial regulator, the Financial Conduct Authority (FCA) has penalized The Royal Bank of Scotland Group plc (RBS - Free Report) for serious failure in offering proper advice to customers seeking mortgage between Jun 2011 and Mar 2013. The company will pay 14.5 million pound ($24 million) to settle the charges.
This news has done no good to the Edinburgh-based bank, which is currently attempting to restructure itself into a more consumer-oriented smaller firm as well as rebuilding its public image.
Per FCA’s allegation, RBS and its NatWest business had failed to offer the right kind of mortgages to suit customer needs. RBS, owned 81% by the British government, was unable to make proper assessment of the overall client budgets, while offering mortgage-related advice. This ended up in some improper mortgage purchases.
During the aforementioned period, RBS and NatWest sold about 177,000 mortgages, including around 30,000 mortgage products sold upon advice. Nevertheless, out of the 164 mortgage sales examined by the FCA, only 2 met the regulatory standards.
RBS has lately been grappling with a series of crisis. Like many other banks, allegations of price-rigging and currency-market collusions have tarnished its image. Moreover, the bank was fined 390 million pound for allegedly fixing the London inter-bank offered rate (LIBOR) for pecuniary gains. All these along with the latest fine by FCA, have somewhat undermined the CEO’s initiatives to build up the bank’s image.
RBS currently holds a Zacks Rank#3 (Hold). Some better-ranked foreign banks include Banco do Brasil S.A. , KB Financial Group, Inc. (KB - Free Report) and Shinhan Financial Group Company Limited (SHG - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).