NEWS: RBS in Fraud Probe

Mark McLaughlin
Edinburgh Evening News
February 2, 2009

THE Royal Bank of Scotland is investigating an alleged insurance mis-selling plot at one of its Edinburgh branches.

Six members of staff, including the branch manager, are understood to have been suspended following claims they were double-selling insurance in order to secure higher bonuses. They are also said to have enticed customers with promises they would be entered into a prize draw which they had no chance of winning.

RBS has two tiers of home insurance - standard and elite - and the staff are said to have been using a system which confused customers into signing up for both.

When customers agreed to buy one tier of insurance, they were sent paper work for both, leading many to wrongly sign and return the two sets. Those customers were then charged twice and the staff claimed double points towards the bonuses awarded to their branch.

One RBS source said: "The customers invariably became confused and signed both of the policies and sent them back - perhaps thinking it was a duplicate of the same form - and so would be signed up to two insurance policies and charged twice.

"The bank awards 110 bonus points for each policy sold, and staff were claiming points for each policy they sent out, meaning they were getting double points each time."

Employees in the best branches stood to win a GBP 400 prize and larger annual prizes such as holidays.

The branch involved, which has around a dozen employees, is said to have just been docked almost 10,000 points, suggesting around 90 customers may have been double charged.

It is understood a senior manager spotted discrepancies between the number of policies sold and the number of customers.

The source claimed staff were under "intense pressure" to sell the products, and that the pressure had intensified as the effects of the banking crisis took its toll on RBS.

The staff are also said to have signed customers up to the bank's New Year's Resolution prize draw under false pretences.

"It was basically a hook to draw customers in. Customers were supposed to be entered into a draw to win GBP 5000," said the source.

"Staff would phone up and offer a variety of products based on the customer's resolution for their finances. The branch ran out of official forms, but continued to take details.

"Customers were promised they would be entered into a prize draw, but they had no chance of winning.

"The draw was due to take place on January 10, but staff were still offering prizes on the 10th in order to solicit business."

The source claimed customers have not yet been refunded.

RBS said an investigation was underway into the allegations, but refused to confirm or deny whether the staff had been suspended. An RBS spokeswoman said: "RBS takes such allegations extremely seriously and always investigates them thoroughly.

"We have rigorous processes in place which we regularly review to ensure that all staff carry out their duties in full compliance with our policies and procedures.

"If there is ever any evidence of wrongdoing, we immediately take appropriate action. It would be entirely inappropriate to make a comment on this matter at this time as it is still the subject of an ongoing investigation."

Banks can face severe penalties for mis-selling insurance, but action is usually taken by the Financial Services Authority in cases involving far larger numbers of customers. The RBS source said police had not been contacted.