British banks may face hefty fines for failing to properly deal with customer complaints.

The UK’s Financial Services Authority said Tuesday that it has fined two banks, Royal Bank of Scotland and its National Westminster Bank subsidiary, £2.8 million ($4.33 million) for multiple failings in the way they handled customer complaints.

The FSA’s investigation found that there was an unacceptably high risk that customers may not have been treated fairly due to a number of failings within the banks’ approach to routine complaint handling.

Of the complaint files reviewed by the FSA, 53% showed deficient complaint handling; 62% showed a failure to comply with FSA requirements on timeliness and disclosure of Ombudsman referral rights; and 31% failed to demonstrate fair outcomes for consumers.

“We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly. The failure of these two high street banks to deal adequately with complaints put consumers at unacceptable risk and the fine of £2.8 million reflects this,” said Margaret Cole, director of enforcement at the FSA.

The failings in the complaints handling processes at RBS and NatWest were uncovered during the FSA’s review of complaints handling in the UK’s major retail banks, it said. As a result of the review, five banks have undertaken significant action to improve their complaint handling, including RBS and NatWest, which co-operated fully with the investigation, accepted the findings at an early stage, and have agreed to make significant changes to their complaints handling arrangements.

As a result of the firms agreeing to settle at an early stage they receive a discount on the penalty. Without the discount the FSA would have sought to impose a financial penalty of £4 million on the firms.

“We acknowledge the findings of the FSA investigation. It confirmed short comings in our routine complaint handling that we assessed in our own internal review and which we are committed to putting right,” said Brian Hartzer, CEO, UK Retail, Wealth and Ulster Bank, RBS.

IE