The FCA has fined Santander £12.4m for poor investment advice after a mystery shopping exercise in 2012.
The regulator found there were “significant deficiencies” in Santander’s suitability processes and in ensuring that financial promotions and communications were fair, clear and not misleading.
The bank also failed to carry out regular reviews to check that investments continued to meet customers’ needs and that the service promised to customers was actually provided.
The FCA says sales of retail investment products between January 2010 and December 2012 were affected, and some of its promotions and communications with customers from as early as April 2004.
The FCA says the failings were “systemic” and related to a large number of customers, including some who may have been vulnerable due to their age or personal circumstances.
Santander is writing to affected customers to offer them the opportunity to withdraw from their investment or have a review of the sale; conducting a redress exercise for premium investments customers; and implementing a new annual review process for customers who remain invested in premium investments.
FCA director of enforcement and financial crime Tracey McDermott says: “Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility.
“If trust in financial services is going to be restored, which it must be, then customers need to be confident that those advising them understand, and are driven by, what they need. Santander let its customers down badly.”
Following a Dear CEO letter from the FCA in June 2011 regarding wealth management services, Santander instructed external consultants to review its premium investment sales.
The review of 50 sales in the first half of 2011 found that only 58 per cent were suitable, and identified concerns including inadequate customer profiling and recommendations to customers with insufficient capacity for loss.
Santander told the FCA in August 2011 its tools and processes were working well to deliver appropriate outcomes “for the great majority of customers”. The FCA says this response was “misleading”.
Santander head of UK banking Steve Pateman says: “We regret that elements of Santander UK’s historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns. We expect customer detriment to be low given the performance of the underlying investments and, as the FCA acknowledges, Santander has seen very few complaints from customers.”
In November 2012 the bank set aside £232m, saying at the time the provision related to undisclosed “historic customer conduct issues”.
In February 2013 Money Marketing revealed the regulator was investigating Santander over the quality of its investment advice.
In March 2013 Santander confirmed it had pulled out of investment advice, after pulling 800 advisers off the road because they were not fully trained to meet RDR requirements.