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.