The British division of Spanish banking group Santander has been fined £12.4 million ($22.9 million) after regulators found that its approach to offering investment advice created a serious risk of clients getting unsuitable advice.
The UK’s Financial Conduct Authority (FCA) said Wednesday that Santander UK plc has been fined £12,377,800 after the regulator “uncovered serious failings in the way it offered financial advice from its bank.”
The FCA says that it found a significant risk of the firm giving unsuitable advice to its customers. Among other things, it says that its approach to assessing investors’ risk appetites was inadequate; that it failed to make sure the disclosure given to clients was clear and not misleading; that it failed to properly train reps; and, that it failed to properly monitor the quality of investment advice. The regulator says that these failings took place despite repeated communications and warnings about suitability of advice to the industry.
In addition to the fine, Santander has agreed to contact all affected customers and pay redress for any sales that were sub-standard. The regulator notes that in some cases the redress will be minimal because the value of the stock markets has risen since many of these investments were first made. The bank agreed to settle at an early stage, qualifying for a 30% discount on its fine, which would have been £17.7 million.
“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,” said Tracey McDermott, director of enforcement and financial crime at the FCA.
The FCA says that the firm stopped giving financial advice in branches in late 2012, after the regulator first communicated its concerns.