Just two out of 164 mortgage sales made by a major lender were up to standard.

As a result, the Royal Bank of Scotland and its retail wing NatWest have been fined £14,474,600 by the Financial Conduct Authority.

It says the firms failed to ensure that their advice given to customers was suitable. The lender said it may now offer compensation to anyone who lost out.

Two reviews of mortgage sales between 2011 and 2013 were carried out. In over half the cases, it was not clear from the file or the call recording whether the advice given had been suitable.

The issues with the sales process included affordability assessments, failing to consider the full extent of a customer’s budget when making a recommendation, failing to advise customers who were looking to consolidate debt properly, and not advising customers what mortgage term was appropriate for them.

It was found that in the firms’ own mystery shopping, there were examples of advisers giving personal views on the future movement of interest rates.

The FCA said that this was “highly inappropriate and may have resulted in the borrower being sold the wrong type of mortgage for them”.

The firms did not adequately address the failings when concerns were raised about the quality of sales by the FCA’s predecessor, the Financial Services Authority. This resulted in customers being placed at risk for an even longer period.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Taking out a mortgage is one of the most important financial decisions we can make. Poor advice could cost someone their home, so it’s vital that the advice process is fit for purpose.

“Both firms failed to ensure that their customers were getting the best advice for them.”

However, the FCA acknowledged that “at the current time, there is no evidence that the failings have caused widespread detriment to customers”.

Both firms have agreed to contact around 30,000 consumers who received mortgage advice in the relevant period, to allow them to raise any concerns they have.

The firms agreed to settle at an early stage and therefore qualified for a 30% discount. Were it not for this discount, the fine would have been £20,678,000.