The regulator found there was a "significant risk" that Santander customers were given unsuitable advice. The bank's approach to considering investors' risk appetite was deemed "inadequate" and the FCA found evidence of widespread failure to regularly check that investments continued to meet clients' objectives, despite promises to the contrary.
FCA director of enforcement and financial crime Tracey McDermott said Santander UK failed to live up to its responsibility of helping its customers manage their money wisely. She said the bank had "let them down badly".
Minimal redress
Santander has agreed with the FCA to contact all affected customers and, for any sales that were sub-standard, due redress will be paid. Although as markets have risen since many of these investments were first made, it is likely that consumer losses – and therefore redress for some – will be minimal, a statement from the FCA explained.
Any customers with Premium Investment accounts – promoted as offering a tailored service including reallocation of investments and rebalancing of portfolios – may get redress if they paid for a service they did not receive.
The FCA said repeated communications and warnings about suitability of advice to the industry were issued by its predecessor, the Financial Services Authority.
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%, otherwise the amount would have been £17,682,730.
