The FSA has launched a probe into sales of an AIG bond fund product by RBS' private banking arm Coutts.
RBS says it is "cooperating fully" with the probe into Coutts, which counts Queen Elizabeth II among its clients.
In a statement the bank said: "In July 2010, the FSA notified RBS Group it was commencing an investigation into the sale by Coutts & Co of ALICO (American Life Insurance Company) Premier Access Bond Enhanced Variable Rate Fund to customers between 2001 and 2008."
A spokeswoman at the FSA confirmed the statement was accurate.
Earlier this week the FSA said it has fined RBS £5.6m for UK sanctions control failings at Coutts and other units, the regualtor's biggest fine to date in pursuit of its financial crime objective.
The announcement came alongside RBS second quarter results which showed lower impairment losses had helped operating profit rise from the first quarter.
AIG in March agreed to sell ALICO to MetLife Inc .
The dispute over the sale of the bonds gained prominence last July when Sir Keith Mills, founder of the Air Miles and Nectar loyalty programmes, launched a national ad campaign to publicise his grievance with Coutts.
The multi-millionaire claims he stands to lose around £30m after Coutts recommended he purchase £65m of AIG Life's Premier Bonds, backed by its Enhanced Fund.
Mills subsequently established the Coutts Action Group to raise awareness of the oversight.
The ad claimed Coutts told investors it saw no risk with AIG Life ‘Enhanced Fund' bonds, despite warnings of financial problems in the business press.
