Royal Bank of Scotland agreed to pay $4.4 million in fines after U.K. financial regulator FSA found that customers of the RBS and Nat West units had complained that branch services were poorly handled.  RBS is the 2nd largest provider of retail banking products and services in the U.K., with about 2,200 bank branches and 15 million customers.  RBS and NatWest are both part of the RBS Group and their UK retail bank branch networks operate under the umbrella of RBS UK Retail.

    Where RBS and Nat West Went Wrong.  RBS and NatWest apparently failed in what operations experts often define as "quality controls," in that they had inadequate procedures for addressing customer complaints and and for monitoring whether the results met the banks'  guidelines.  The FSA specifically cited:  (i) delayed customer response;  (ii) poor quality investigations into complaints and shoddy correspondence - which only partially addressed the complaint;  (iii) failure to explain the reason behind a rejection or acceptance of fault;  and, (iv) both failed to explain to customers’ their rights.

• 53% of the complaints reviewed by the FSA showed deficient complaint handling;
• 62% showed a failure to comply with FSA requirements on timeliness;
• 31% didn't demonstrate fair outcomes for consumers.
• The banks allegedly provided inadequate training or guidance for bank staff on how to investigate a complaint.

    Cooperation Pays Off.   RBS and NatWest cooperated fully with the investigation, accepted the findings at an early stage, and agreed to make significant changes to their complaints handling arrangements.  Those efforts led the FSA to reduce the fines by 30 percent%. 

In addition to the monetary fines, both RBS and NatWest are required to hire an independent consultant to undertake an extensive review of all parts of their complaint handling arrangements.   [Securities Technology Monitor (formerly SIN), 1/11]