£2.2m FSA fine for RBS

RBS Insurance has been fined £2.17 million by the Financial Services Authority after staff from Direct Line and Churchill altered customer files and forged signatures in an attempt to pass a regulatory inspection.

The FSA said the insurers - owned by Royal Bank of Scotland, which is 83% owned by the taxpayer - had encouraged staff to ensure closed complaint files were complete after 28% had failed a sample review by the watchdog.

In June 2010 the FSA discovered that 27 of 50 files sent for a further review had been altered by RBS Insurance staff. Seven documents actually contained staff signatures forged by one person.
The FSA accordingly imposed the fine for failure by the firms to conduct their businesses with due skill, care and diligence. The fine would have been £3.1 million if RBS hadn't settled early and qualified for a 30% discount.

Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "This is a serious breach. The firms' attempt to ensure that complete files were provided to the FSA backfired."

She added that the majority of alterations were minor in nature and none of the changes resulted in any customer detriment.

Paul Geddes, chief executive of RBS Insurance, said: "We are very disappointed that we did not meet the standards we expect of ourselves and which the FSA expects of us. We acknowledge the shortcomings identified in the findings and have taken action to address these issues."