Santander FSCS admission
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Santander has admitted it does not know if its structured product customers are covered by the Financial Services Compensation Scheme.
As a precaution, it has written to investors, warning that they will not be covered.
In January, the bank wrote to investors who took out a Santander guaranteed growth plan or guaranteed capital plus plan between October 2008 and January 2010.
Until January 2010, the firm’s product literature said the FSCS may cover customers if Santander becomes insolvent, depending on the circumstances of the claim. But Santander’s letter warns customers they would not be entitled to claim compensation from the FSCS, even though the bank admits it is not sure how the rules would apply.
A Santander spokesman says: “After looking at the FSA’s rules, following its thematic review of structured products, we are not 100 per cent sure these products would be covered. Saying these products would not be covered is a better position to take than saying they would be covered.”
The FSA says where the FSCS appears in promotional material, it is good practice to say if it does or does not apply.
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Readers' comments (3)
Missold Investments | 4 Mar 2011 1:18 pm
This is rediculous. Santander (as Abbey National) have been here before. Abbey National Treasury Services were taken to court by FSCS in 2008 accused of collaboration with NDF in the development and promotion of structured products that mis-led consumers between 1999 and 2002. Abbey denied the charges. FSCS had paid out £21.5m to 1800 investors that time.
In 2009 following the Lehman collapse the FSA reported widespread mis-selling of these products by (amongst others) NDF - they cited lack of clarity over FSCS cover as one of the issues. FSCS paid out to one third of the 6000 affected investors this time because of the mis-selling. There are still thousands pressing for compensation. The action group for those affected by Lehman structured products (including savers, family, friends and advisers) is at www.missoldinvestments.co.uk
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Anonymous | 4 Mar 2011 5:12 pm
Why is the FSA not taking action against Santander over this issue?
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Anonymous | 2 Jun 2011 9:22 pm
I have a Guaranteed Capital Plus (Issue 19) 3.75 years, So I am not sure if I am covered by the FSA
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