NatWest fine makes for uncomfortable reading for compliance staff and industry
Written by Charlie Palmer on 10/08/2018

NatWest fine makes for uncomfortable reading for compliance staff and industry.

FCA FINDINGACTON 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.


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. 

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