The FSA has fined Santander £1.5m for failing to confirm the circumstances under which its structured products would be covered by the Financial Services Compensation Scheme.
Between the end of 2008 and January 2010 Santander sold approximately £2.7bn of structured products. In June 2009 Santander concluded there would be limited circumstances when its guaranteed capital plus product and its guaranteed growth plan would be covered by the FSCS.
New customers were not informed of the limitation in FSCS cover until January 2010. A total of £1.2bn of structured product sales were carried out after June 2009.
The FSA says Santander acknowledges it could have changed its product literature and training materials earlier to reflect the FSCS position accurately.
FSA acting director of enforcement and financial crime Tracey McDermott says: “When firms provide customers with literature about products, the information has to be correct and unambiguous. After all it is there to help people make informed decisions about whether to invest. The extent of FSCS cover is important to customers, and firms must be clear about this in their Key Facts documents.
“Considering that sales of these products took place between 2008 and 2009, a time of financial uncertainty, Santander should have moved more quickly to confirm under which circumstances FSCS cover would be available.”
The regulator has not found that the product sales were unsuitable.
Santander wrote to investors in March saying they would not be covered by the FSCS. At the time Santander said it did not know whether FSCS cover applied to the products or not, so wrote to investors as a precaution to say cover would not apply.