Key findings from Phase 2 of Travers Smith review
NatWest Group (NWG) has today published the key findings and recommendations from Phase 2 of the Travers Smith independent review – commissioned by the Board in July – relating to account closures at Coutts over the 24-month period prior to 28 July 2023.
The key findings and recommendations report (the report) published was compiled by Travers Smith. The Phase 2 review analysed 84 customer account closures – including all relevant PEP cases exited over the relevant period – building a total sample of around 10% of relevant account closures in the period.
The report confirms that decision-making was consistent with relevant standards and otherwise appropriate and that there was no evidence of discrimination due to political views or affiliations, or any other protected characteristic. However, it identifies several areas where Coutts’ policies and procedures governing exit decisions could be improved, including the process by which exit decisions are communicated to customers and the clarity of communications.
NatWest Group has accepted – and will implement – all the recommendations contained in Phases 1 and 2 of the review.
Commenting on the report, Mohammad Syed, chief executive of Coutts, said: “Following the publication of the Phase 1 reports in October, we recognised the need to improve our customer account closure processes and those improvements are already well under way. Although Travers Smith confirm that, in general, decisions were appropriate and that there was no evidence of discrimination, it is clear there are lessons to be learned.
“This report reaffirms that there were a number of shortcomings in our approach to account closures at Coutts and, in particular, in the quality and consistency of our communications. The experience of some of our customers fell short of what they should expect, and we apologise to them.
“We are committed to implementing all of the recommendations made by Travers Smith, including comprehensively reviewing and updating exit and communication processes, so that we deliver a better, more consistent experience for all our customers.”
The report sets out Travers Smith’s key findings and recommendations in full.
In summary, the Phase 2 findings include:
i. Decision-making: in general, exit decisions were made in accordance with relevant bank policies and processes and there was no evidence of discrimination due to political views or affiliations, or any other protected characteristic. Decision-making by Coutts in relation to the exit cases was consistent with relevant standards and otherwise appropriate. However, Travers Smith found that policies and procedures governing exit decisions could be improved in some areas.
ii. Exit processes: there is little by way of formal procedure or process governing how non-financial crime exits must be carried out by Coutts staff, and there is no formalised set of definitions for the potential bases for exit or guidance on thresholds to be met for a customer to be exited. Travers Smith also found that:
- In some exit cases, there were deficiencies in the internal process followed, and in the content or format of the exit letter or the process by which that letter was conveyed to the customer;
- In a small number of cases, by not communicating at least 60 days’ notice of account closure to the customer, Coutts potentially breached Regulation 51(4) of the Payment Services Regulations; and
- Primarily in relation to the failure by Coutts to provide reasons for exits, Coutts potentially breached FCA rules, including the obligation to treat customers fairly.
iii. Data protection analysis: the report identified some potential compliance failures and/or best practice shortcomings in Coutts’ data processing in respect of exit decisions. The report also contains a summary of Travers Smith’s data protection analysis relating to Phase 1 of the Travers Smith independent review.
In light of the recommendations made by Travers Smith, and its own internal work, NatWest Group is taking action to ensure better outcomes and experiences for customers across the bank. The key steps include:
- Reviewing and updating exit processes, including a review of exit letters and the introduction of a commercial exits framework that provides customers with the opportunity to improve their economic contribution where appropriate;
- The establishment of a new franchise exits process and an appropriate PEP declassification programme; and
- Refreshed guidance and mandatory training on the complaints process will be issued to the front line, Coutts 24 and all relevant senior leaders.
In October, the FCA confirmed that it is undertaking a programme of supervisory work with NatWest Group and Coutts. NatWest Group will continue to work with its peers and regulators and with the UK government so that it is easier for banks to communicate clearly with customers who are being exited.
In light of the recommendations made by Travers Smith, and its own internal work, NatWest Group is taking action to ensure better outcomes and experiences for customers across the bank. The key steps include:
- Reviewing and updating exit processes, including a review of exit letters and the introduction of a commercial exits framework that provides customers with the opportunity to improve their economic contribution where appropriate;
- The establishment of a new franchise exits process and an appropriate PEP declassification programme; and
- Refreshed guidance and mandatory training on the complaints process will be issued to the front line, Coutts 24 and all relevant senior leaders.
In October, the FCA confirmed that it is undertaking a programme of supervisory work with NatWest Group and Coutts. NatWest Group will continue to work with its peers and regulators and with the UK Government so that it is easier for banks to communicate clearly with customers who are being exited.
