MortgagesApr 30 2015

RBS reveals £190m investment advice redress

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RBS reveals £190m investment advice redress

Majority state-owned banking group Royal Bank of Scotland has revealed it has set aside £190m to cover claims relating to investment advice and private banking wealth management, in its latest results which show it continued to amass losses in the first three months of 2015.

The banking giant’s £446m loss for the first quarter of 2015, which compares with a £1.2bn for the same period in 2014, included restructuring costs of £453m and £856m of litigation and conduct charges.

The results also note “charges” relating to regulatory actions in 2014 of £1.5bn, including £190m to cover “provisions relating to investment advice in retail and private banking”. A further £720m was set aside amid an ongoing forex market investigation, while £59m was earmarked over its IT failure in 2012.

In recent years RBS has been hit with a slew of fines and regulatory action. Its private banking division Coutts, which it revealed last summer was being sold, had set aside £110m relating to sales of unsuitable investments over 60 years.

RBS and its Natwest division were also fined £14.5m by the Financial Conduct Authority last summer over “serious failings” in the mortgage advice provided to customers. A regulatory review found that only two of 164 sales examined met the required standards

In February 2013, RBS settled with UK and US regulators in relation to Libor fixing. RBS agreed to pay penalties of £87.5m, $325m (£210m) and $150m (£97m) to authorities on boths sides of the Atlantic respectively to resolve the investigations.

In November 2014, RBS then reached another settlement with the FCA and US regulators in relation to investigations into failings in the bank’s foreign exchange businesses, agreeing to pay penalties of £217m and $290m (£187m) to resolve the investigations.

However, RBS revealed positive results for the mortgage side of the business so far this year and a surge in the number of “mortgage advisers” it has in branches. The number of mortgage advisers rose by 91, or 12 per cent, in the opening months of 2015 alone to a total of 835.

In part as a result of this “increased capacity”, the bank reported it provided 8 per cent of gross new mortgage lending in the first quarter of 2015, in line with historical market share, delivering £400m net mortgage growth.

New mortgage applications accelerated towards the end of quarter with volume in March up 10 per cent year-on-year. March was the highest month for mortgage application numbers and volumes since the start of 2014.

Mortgage balances were £103.6bn, 3 per cent more than at the end of the first quarter of 2014.

ashley.wassall@ft.com, emma.hughes@ft.com