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 given”.|
|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.|
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.
The Natwest fine is part three of a trilogy of fines - Sesame Network Stonebridge and Natwest.
All three shared these characteristics:
The lessons are these
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.