Royal Bank of Scotland will pay out £40m to compensate 730,000 customers after discovering that staff were rigging foreign money transfers that bolstered the bank’s profits.

The latest scandal is a setback for the bank, which has been trying to regain customers’ trust and draw a line under a string of historic misdeeds dating back to the financial crisis.

Staff on the bank’s foreign exchange team are believed to have earned RBS tens of millions of pounds in extra profit by manipulating exchange rates between 2010 and 2014. Workers rigged computer systems to add an extra 60p of costs on to every £1,000 sent abroad through bank transfers, the Telegraph reported.

While they did not personally pocket the cash, a group of fewer than 10 employees involved in the rigging were able to claim bonuses linked to inflated earnings by their department. All of those employees have since left the bank.

It is believed to be the first case of foreign exchange rigging of this kind among UK banks.

RBS reportedly made the discovery while investigating a separate foreign exchange manipulation scandal. It launched the compensation scheme of its own accord rather than being told to do so by the City watchdog, although the regulators have been informed.

It is the first scandal to emerge after the appointment of RBS boss, Alison Rose, who took over from Ross McEwan at the start of November.

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Rose was expected to oversee an institution with fewer legal problems after the bank reached a $4.9bn (£3.8bn) settlement with US authorities and the City watchdog confirmed it would not punish it for mistreating business customers following the financial crash.

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An RBS spokeswoman said: “We are proactively refunding the difference, with interest, for incorrect foreign exchange rates that were applied to some international payments for certain customers between 2010 and 2014.

“We identified and addressed the source of the incorrect exchange rates in 2014, and put in place additional checks and controls to prevent this happening again. We apologise to those customers impacted.”



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