A PRIVATE bank which boasts the Queen among its clients is set to pay back millions of pounds to customers who have been sold unsuitable investments.
The 300-year-old firm Coutts and Co has set aside £110 million for compensation claims following a review of advice it has given to clients over a period of 60-plus years.
Bosses at the firm, which is owned by state-backed Royal Bank of Scotland (RBS) and runs part of its worldwide operation in Leeds, admitted that the review identified a number of cases where the guidance given to customers on investments was not of the standard expected.
Coutts chief executive Michael Morley said there had been “some instances where the advice given during our previous advice process could have been better”.
Around 15,000 customers have been contacted regarding compensation claims via letter so far and the review is still ongoing.
The news comes days after RBS was fined £14.5 million for serious failings in its advice to mortgage customers from June 2011 to March 2013.
The RBS group, which is 80 per cent-owned by the taxpayer, has also put aside more than £4 billion for mis-selling payment protection insurance (PPI) and interest rate swaps – complex financial products which were sold to small firms.
It is understood that the £110 million sum will come from a £206 million provision that RBS has already made for the private bank. But it is the first time that the cost of this particular issue, detailed in the Coutts accounts, has been made public.
It comes after the business agreed to review investment advice following new rules from the Financial Conduct Authority (FCA) in November 2012.
Part of the compensation fund is expected to be used to trawl back through the files of thousands of clients, though the majority will be paid as redress to customers found to have unsuitable investments.
The provision is not the first time that Coutts will have had to pay out for past mistakes.
In March 2012 it was fined £8.75 million for failing to ensure it was doing enough to be certain it was not handling laundered money, while it was given a £6.3 million penalty for misleading customers over a savings product linked to bailed-out US insurer AIG.
Earlier this year RBS confirmed Coutts was to look into the suitability of investment advice provided to its clients, following a 2013 review by the FCA.
It said: “Coutts is in the process of contacting clients and redress will be offered in appropriate cases. A provision has been taken to cover any potential liability arising from this review.”