Royal Bank of Scotland has been fined £2.8m for poor handling of customer complaints, in the first case to arise from an industry-wide probe by the Financial Services Authority.

The FSA found that the bank, and NatWest, its UK retail brand, had responded inadequately to 53 per cent of complaints that the regulator reviewed. Delays and incomplete responses were common and the regulator found RBS failed to provide adequate training for staff handling complaints.

“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 £2.8m reflects this,” said Margaret Cole, FSA enforcement director.

As a result of the investigation into the industry , five banks were required to improve their complaint-handling and both RBS and Lloyds Banking were referred for enforcement proceedings after the investigation.

The probe, which looked at complaints handled between September and December in 2009, also found that 62 per cent made to RBS were not handled within FSA guidelines for timeliness and 31 per cent failed to demonstrate a fair outcome for consumers.

RBS would have been fined £4m but received a 30 per cent discount for its early co-operation. As part of the settlement it was also required to hire an outside expert to review all its complaint-handling procedures.

Brian Hartzer, chief executive of UK retail for RBS, said: “We acknowledge the findings of the FSA investigation. It confirmed shortcomings in our routine complaint handling that we assessed in our own internal review and which we are committed to putting right.”

The FSA published a consultation last autumn that would require companies to improve complaints procedures and included the stipulation that they designate a senior person responsible for the area.

Consumer groups said the fine was yet more evidence of the banking system “failing its customers” and called on the executives responsible for the failings to hand back some of their bonuses.

“They should not have been rewarded for poor performance,” said Dominic Lindley, principal policy adviser with Which?, the consumer rights campaign group

“Instead of taking complaints seriously, RBS and NatWest have been paying lip service to the process, delaying and inconveniencing their customers and systematically rejecting complaints they should have been upholding.

“That the banks in question are 83 per cent owned by the taxpayer makes these failings even harder for customers to swallow.”

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