Santander UK fined £12.4m for widespread investment advice failings

Published: 26/03/2014   Last Modified : 01/04/2014

Santander UK Plc has been fined £12,377,800 by the Financial Conduct Authority (FCA) after the regulator uncovered serious failings in the way it offered financial advice from its bank.

In particular, there was a significant risk of Santander UK giving unsuitable advice to its customers, its approach to considering investors’ risk appetites was inadequate, and for some people it failed to regularly check that investments continued to meet their needs - despite promising to do so.

Tracey McDermott, director of enforcement and financial crime, 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.’

In agreement with the FCA, Santander will now contact all affected customers and, for any sales that were sub-standard, redress will be paid where due.

Because the value of the stock markets has risen since many of these investments were first made, it is likely that consumer losses - and therefore redress for some - will be minimal. Customers who held a Premium Investment, which were promoted as offering a tailored service including to reallocate investments and rebalance portfolios, may get redress if they paid for a service they did not receive.

Affected customers do not need to do anything as Santander UK will be contacting anybody involved. More information is available on its website.

The FCA’s investigation found that Santander UK had:

  • failed to make sure that its advisers were fully getting to grips with customers’ personal circumstances before making a recommendation, including understanding how much risk they were willing to take;
  • failed to ensure that customers investing were given clear and not misleading information about its products and services;
  • for Premium Investments, failed to carry out regular ongoing checks to ensure the investment was still meeting customer needs;
  • failed to make sure new advisers were properly trained before being allowed to give investment advice; and
  • failed to properly monitor the quality of investment advice which meant that, where poor advice was given, it was not always picked up.

The failings took place despite repeated communications and warnings about suitability of advice to the industry by the Financial Services Authority (FSA), the FCA’s predecessor, and were uncovered by both a mystery shopping exercise and wealth management thematic review by the regulator.

When the FSA first put its concerns to Santander UK in late 2012, the firm immediately decided to stop giving financial advice in branches to prevent further problems occurring.

Santander UK agreed to settle at an early stage of the investigation so its fine was reduced by 30%. Were it not for this discount it would have been fined £17,682,730.

Notes for editors

  1. The Final Notice.
  2. The results of the mystery shopping review into the quality of investment advice in banks and building societies.
  3. The finalised guidance on assessing suitability published in March 2011.
  4. A speech given by Clive Adamson at the APCIMS Compliance Conference in July 2013 announcing the results of the wealth management thematic review.
  5. The FSA’s letter to CEO’s of Wealth Management firms on 14 June 2011 can be found at  
  6. On 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  7. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  8. Find out more information about the FCA.

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