FCA fines Santander £12.4m fine for 'widespread investment advice failings'

Santander UK has agreed to contact affected customers and offer redress where appropriate, but Steve Pateman, head of UK banking, said he expected the level of customer losses to be low "given the performance of the underlying investments".

The FCA also said that since the value of the stock market has risen since many of the investments in question were first made, that "it is likely that consumer losses, and therefore redress for some, will be minimal". It added however that customers who paid for a Premium Investment may be entitled to compensation "if they paid for a service they did not receive".

The fine follows a year-long FCA investigation into Santander after a "mystery shopping" exercise across the UK's banking sector unearthed shortcomings in its investment advice.

Santander UK temporarily suspended the sale of investment products last year but is understood to have overhauled its advice service in response to the findings of the exercise, which concluded in December 2012.

Between March and September 2012, the Financial Services Authority (FSA), the FCA's predecessor, paid more than 230 visits to Britain's six main high street banks and building societies. The main problems identified across the industry were that advisers failed to identify the level of risk customers were willing to take, did not take into consideration the length of time customers wanted to hold the investment and did not always take a customer's financial circumstances into account.

When the results of the mystery shopping exercise were published in February last year, Clive Adamson, director of supervision at the FSA, said: "This review shows that customers are not consistently getting the quality of advice on their investments that they should expect when visiting an adviser in a bank or building society.

"Whilst we are disappointed by the results of this review, we are encouraged by the action that the firms involved have taken to rectify the situation for their customers.

"Since this review took place, we have introduced new rules on investment advice which have increased the professional standard of the advisers operating in the market and have removed the potential for advisers to recommend products that pay the largest commission but may not be right for the customer."

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