Britain's financial watchdog fined Royal Bank of Scotland and its NatWest division £2.8m sterling today for poor handling of customer complaints.
The Financial Services Authority said its investigation found an unacceptably high risk that customers may not have been treated fairly due to multiple failings in 2009 in the banks' approach to routine complaint handling.
Margaret Cole, FSA managing director of enforcement, said the poor performance at the majority state-owned bank came to light during a review of major lenders.
'We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly,' Cole said in a statement.
The watchdog published a consultation paper last September on improvements to complaint handling procedures at all banks and said RBS and NatWest agreed to make significant changes.
RBS and NatWest also agreed to settle at an early stage and qualify for a 30% reduction in penalty, thus avoiding a £4m fine.
'We recognise the importance of complaint handling for our customers and are focussed on addressing the root causes of complaints,' said Brian Hartzer, chief executive of RBS Group's UK retail operations.
The FSA said the failings included delays in responding to customers, poor quality investigations into complaints and failing to address all concerns raised by customers.
During the time investigated, RBS was Britain's second largest provider of retail banking products with 2,200 branches and 15 million customers.
