The review was commissioned by NatWest following pushback on Coutts' decision to close former MP Nigel Farage's account. Coutts is NatWest's private banking arm.
Carried out by Travers Smith, the first stage of the review was published today (27 October), and determined that although the bank thought it was acting with clear rationale, the merits of those decisions were questionable.
The review concluded that while the decision to close the former MP's account was clear to NatWest based on the "commercial rationale", there were other factors involved, "foremost among those other factors was the risk Coutts perceived to its reputation in the eyes of it stakeholders, including other customers, staff and investors, on account of being seen to be providing banking services to the client, given his public statements on issues such as the environment, race, gender and migration".
FCA sets out conditions of review into treatment of politically exposed persons
However, Travers Smith's report noted that the assumed reputational risk of allowing Farage to hold a bank account were not the driving factors behind the decision to close said account, as it was "highly probable that the exit decision would not have been made had Coutts deemed the relationship with the client to be commercially viable".
But the report still said Coutts failed to pay due regard to the interests of Farage and "failed to treat him fairly", which "might also amount to a regulatory breach, but is a matter for the relevant regulator to decide".
In response to the findings, NatWest Group chair Howard Davies said: "This report sets out a number of serious failings in the treatment of Farage. Although Travers Smith confirmed the lawful basis for the exit decision, the findings set out clear shortcomings in how it was reached as well as failures in how we communicated with him and in relation to client confidentiality."
Davies said the bank "apologise[s] once again to Farage for how he has been treated. His experience fell short of the standards that any customer should expect".
He said: "Our job now is to make sure that does not happen again. The bank is committed to implementing all the recommendations made by Travers Smith and we are making substantive changes to our policies and procedures, in particular to ensure that the lawfully protected beliefs or opinions of customers do not play any role in our decision making."
FCA begins investigation into bank's 'politically exposed persons' procedures
Reviewing Travers Smith's findings, the FCA said it would be continuing to look at how the bank's governance, systems and controls are working to identify and address any significant shortcomings.
The supervisory work will include interviewing relevant bank staff and reviews of appropriate policies or procedures.
Earlier in the week the Information Commissioner's Office (ICO) determined that the bank's former CEO at the time of the incident, Alison Rose, broke privacy laws when she spoke to a BBC journalist about the planned closure of Farage's accounts.
Travers Smith's report ruled that there was "no evidence of other relevant leaks of customer confidential information from NatWest Group".
It added that, while the former CEO "should have appreciated in making the disclosures to the BBC.... she did not consciously set out inappropriately to disclose the relevant information".