COUTTS, the private bank that counts the Queen among its clients, has set aside £110 million to compensate thousands of customers who may have been sold unsuitable investments.
The business, owned by Royal Bank of Scotland (RBS), has made the provision as part of a review of advice to clients dating back to 1950.
It comes after RBS was fined £14.5m for serious failings in its advice to mortgage customers from 2011 to 2013.
The group – 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 sold to small firms.
Coutts chief executive Michael Morley has already written to 15,000 customers warning them there had been “some instances where the advice given during our previous advice process could have been better”.
It is understood the £110m will come from a £206m provision 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 2012.
The provision is not the first time that Coutts will have had to pay out for past mistakes.
In 2012, the bank was fined £8.75m for failing to ensure it was not handling laundered money, and received a £6.3m penalty for misleading customers over a savings product linked to bailed-out US insurer AIG.
RBS said at the time of its half-year results this year that Coutts had decided to undertake a past business review “into the suitability of investment advice provided to its clients”, following a 2013 review by the FCA.
It said: “This review is ongoing. Coutts & Co 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.”
RBS said in August it was considering selling the international arm of Coutts in a deal thought to be worth up to £600m.
Coutts was formed in 1692 by Scots goldsmith-banker John Campbell of Lundie, Angus. He set up the business in the Strand, London, under a sign of three crowns, the custom of the day. The Coutts logo still has the three crowns, and its HQ is still on the Strand.
It remained a London bank until 1961, when it opened a branch at Eton. In 1963, it was the first British bank to have a fully computerised accounting system. It opened a Geneva branch in 1987 and, in October 1990, a subsidiary tied up with NatWest to form Coutts Group. The acquisition of the NatWest Group in 2000 established Coutts as the private banking arm of RBS.