Coutts has earmarked £110m for compensation payments

ROYAL Bank of Scotland’s private bank Coutts has been forced to set aside £110m to compensate thousands of well-heeled customers after giving them unsuitable investment advice.

The provision was made last year but only emerged yesterday in detailed accounts filed by the state-backed lender.

The news tops another chastening week for RBS in which the bank was also fined £14.5m by the City watchdog, the Financial Conduct Authority, for dishing out poor mortgage advice to thousands of customers.

In June it transpired that the FCA has ordered Coutts to contact up to 15,000 clients over fears the bank may have been giving poor advice on high risk investments for decades.

In a letter set to customers, who typically have £1m to invest, chief executive Michael Morley said: ‘Looking back, there have been some instances where the advice given during our previous advice process could have been better, and we are working hard to address that.’

He promised that any customers who ‘have suffered any financial detriment’ will be ‘compensated in full’.

The £110m provision suggests that customers will typically be in line for pay-outs of several thousands of pounds. This is just the latest black mark against Coutts, which has a cash machine inside Buckingham Palace and whose client list includes the Queen.

Coutts was fined £6.3m by regulators in 2011 for mis-selling investments backed by failed US insurance firm AIG.

Comedian Frank Skinner and Sir Keith Mills, founder of Air Miles and Nectar cards, lost millions of pounds in the fund, which was billed as a low risk alternative to deposit accounts.

They launched successful highprofile campaigns to secure damages for the loss.

Coutts was also fined £8.75m in 2012 for ‘serious and systematic’ failings when handling money from suspected criminals or foreign despots.

The £110m provision for Coutts was included in the £2.4bn set aside by RBS (up 1.1p to 362.8p) for wrong-doing last year.