By Alexandra Capik
The Financial Conduct Authority (FCA) has hit Santander UK with a £12.4m fine for providing advice deemed unsuitable to its customers despite receiving previous warnings.
Santander UK failed to meet the investment needs of its clients, particularly neglecting investors’ risk appetites. A statement released today said an investigation gone underway by the FCA concluded that Santander UK failed to adhere to several of its duties.
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The bank failed to properly monitor investment advice its advisers provided, which consequently resulted in customers receiving unclear and misleading information. The FCA claimed the bank’s advisers failed to be attuned to clients’ personal circumstances, particularly the level of risk they were willing to take, before providing any sort of financial advice. Furthermore, new advisers failed to receive the proper training required to offer qualified services according to the FCA.
The FCA has ordered Santander to contact clients who have been affected by the bank’s misconduct. Redress will be paid for any sub-standard sales.
Director of enforcement and financial crime, Tracey McDermott, said: "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."
Consumer losses, however, are expected to be minimal due to the stock market value having risen since the investments were made. Those who held Premium Investments, which promised a tailored service including reallocating investments and rebalancing portfolios, are eligible for compensation if they did not receive the service they paid for.
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By GlobalDataSantander’s failings were uncovered by a mystery shopping exercise and wealth management thematic review by the regulator. These failings occurred despite repeated warnings from the Financial Services Authority (FSA) regarding suitability of advice to the industry.
The FSA previously approached Santander UK in 2012 concerning similar matters which resulted in the bank’s decision to stop giving financial advice in branches in order to prevent further issues from arising after being fined £1.5m.
The current fine is said to have originally been £17.7m. It was reduced by 30% due to Santander UK’s agreement to settle at an early stage of the investigation.
