Santander Fined £12m Over Poor Advice Service
Santander UK has been fined £12.4m by the City regulator over poor advice given to its customers.
Details of the penalty were first revealed by Sky News City Editor Mark Kleinman on the Jeff Randall Live programme on Tuesday night.
He revealed that the Financial Conduct Authority (FCA) penalty comes after a 13-month long investigation by its enforcement division.
The fine is the largest suffered to date by Santander UK, which has expanded through acquisition into Britain's fifth-biggest high street bank following takeover deals involving Abbey, Alliance & Leicester and Bradford & Bingley.
Tracey McDermott, FCA 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."
The penalty is significantly below the FCA's biggest-ever fine of £28m, which was imposed on Lloyds Banking Group in December for incentivising staff to sell billions of pounds of unnecessary products.
Kleinman revealed that the City regulator's probe into Santander UK followed a mystery shopping exercise across the banking sector, which exposed failings in the investment advice given to consumers.
As a consequence of the FCA enforcement action, Santander UK announced barely a month later that it was closing its investment advice arm to new customers.
Steve Pateman, head of banking at Santander UK, said: "We regret that elements of Santander UK's historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns.
"To ensure that any concerns our customers may have are addressed we will be writing to them this summer, to offer them an opportunity to withdraw from their investment or have their sale reviewed.
"Customers need take no action now and should wait to receive letters from us."
Other high street lenders, such as Barclays, had already withdrawn from the market altogether, while Lloyds has closed its mass market advisory service and now provides financial guidance to customers with at least £100,000 to invest.
The exodus of major banks from the investment advice market has provoked fears that millions of British consumers are being left financially disenfranchised.
People close to Santander UK said the bank disputed many of the regulator's judgements about the quality of its investment advice during the 13-month investigation.
It is also understood to have argued that consumers suffered no detriment as a consequence of the failings identified by the FCA, an assertion that the regulator is not understood to have contested.