High Street banking giant Santander must pay a fine of almost £12.4 million for giving customers poor financial advice.
An investigation by regulator the Financial Conduct Authority (FCA) found the bank was failing to take customer attitudes to investment risk into account when giving financial advice.
The bank is also accused of a list of business failures relating to offering customers general investment advice.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Customers trusted the bank to manage their money, but Santander failed to do so.
“Instead customers were badly let down and if customers are to trust financial firms, they must start to behave responsibly and keep to their promises.”
Besides paying the fine, Santander has agreed to review customer investments and to pay compensation in cases where bad advice was given.
The FCA explained any customers affected by the ruling do not need to act as Santander will contact them.
Catalogue of investment failures
The FCA’s investigation found five main failures:
- Santander did not fully explain investment risks to customers
- Customers were given misleading information about products and services
- Premium Investments customers were not given regular ongoing reviews to ensure any investment was still suitable for their needs
- Allowed staff to give investment advice without proper training
- Had lax controls to make sure investment advice was not flawed, and if it was, had no system in place to correct the problem
The problems were uncovered by a mystery shopping exercise by the regulator which was followed by a wealth management service review.
The issues came to light late in 2012 and the bank immediately halted giving investment advice.
Warnings about bogus advisers
The FCA has also issued these warnings about bogus firms posing as regulated financial advisers:
- Kevin Edwin Francis Gregory
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser
Find out how to report unauthorised advisers on the FCA web site
