NatWest fine makes for uncomfortable reading for compliance staff and industry.
| FCA FINDING | ACTON YOU NEED TO TAKE |
| NatWest were criticized for only sample checking 11% of files. | The sample of 11% may well be too low although FCA never said that directly. IFAC believe the industry should be on 100% until at least three files pass as suitable first time in each business area per adviser. |
| The fine was 20% of revenue received. | 20% of turnover is a giant fine – for any business but seems to be the norm now if you look at recent cases. |
| 1% of the 173 files that were sample tested passed the standards set. | |
In three different audits 2/3rds passed as unclear and 1/3rd as unsuitable (1% actually passed) | When compliance say “no†they mean “we cannot prove it to be suitable from the evidence givenâ€. |
| Among the unsuitable the actual detriment rate was less than 5%. | Actual customer detriment rates are not a relevant fact. |
| NatWest are writing to 30 000 customers to ask if they would like a review. | The cost of writing to customers normally is about £100 per letter. So you can add another £3m in costs to the above. |
NatWest Fine - mortgage brokers
For mortgage brokers you need to get some files checked now that the MMR has banned non-advised mortgages.
The standard for a mortgage file to pass has increased. Put your file on Bat and we will check it for you. This is what you pay us for.
NatWest Fine - in general
The Natwest fine is part three of a trilogy of fines - Sesame Network Stonebridge and Natwest.
All three shared these characteristics:
- Market leaders in their sector
- Giant fines - at least by the standards of just a couple of years ago
- No specific rules or guidance breaches
- Failure on two of the eleven FCA principles.
- Their procedures as published looked like most other firm sector procedures.
- Miniscule customer detriment rates.
The lessons are these
- What the FCA think of your business is determined by your interaction with them more than by identifiable rule breaches.
- Your observable record - complaints Gabriel returns website information online questionnaires and even your phone call manner are all used to build a picture of you. Should the FCA decide to look further it is probably too late.
- Get your communications with them checked by us get your files checked be careful with websites and avoid social media.
Get a sample of files checked by IFAC and prepare yourself for external examination. Cost is £100 per file for "full advice check" or £40 per file for pre approval file check.