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Royal Bank of Scotland (RBS) has decided to trim its workforce. It will cut 550 jobs across its investment advice and protection teams, which provide tips and advice on various financial products. These employees are expected to be replaced with so-called "robo-advisers".
About 200 of these redundancies will be at its advice team. The move follows the bank's decision to shrink the team, which will now only provide service to those who have more than £250,000 (€323,024, $359,573) to invest. The bank's protection team, which offers advice on life insurance and other products, will see about 200 of their staff let go.
The task of these employees, who will be asked to go, will now be performed by a new automated system that the Edinburgh-headquartered bank is expected to introduce. The new system will ask a list of questions to customers and offer advice to them on the basis of their responses.
The staff cut will help the bank save costs, considering it posted an annual loss of about £2bn for 2015 in February, marking its eight successive annual loss. It will also act as a response to the retail distribution review, the revamp of the 2013 financial regulation, which made it unprofitable for banks to offer investment advice to its customers who had little money to invest.
A RBS spokesman said, "We want to help as many customers as possible invest their money in the right way for them. The demand for face-to-face investment advice is changing. Our customers increasingly want to bank with us using digital technology. As a result, we are scaling back our face-to-face advisers and significantly investing in an online investing platform that enables us to help a new group of customers with as little as £500 to invest."
The move also comes after RBS discovered that it could be sued by owners of small businesses. These businessmen claim to have lost money because of the actions of RBS's global restructuring group (GRG), which handled business customers before it was eventually shut down.
The RBS Litigation Group (RGL) said, "[It had] raised funds to begin the process of building legal claims against RBS". James Hayward, chief executive at RGL said, "Owners of SME businesses damaged or destroyed by the actions of GRG have been looking for a group to take their claims to court and win compensation for their losses."
Arguing that it was ordinary hardworking people who had suffered and not the financial institutions or fund managers, Hayward said, "RBS's actions have destroyed businesses, livelihoods and in many cases the lives of their owners, so I am delighted we have funding in place to begin the process towards taking action against those responsible."
While Enyo Law has been hired by RGL to be advised on the claims, the RBS spokesperson responded, "We believe we have a strong case and will defend these claims vigorously."