Customers who sought investment advice from Santander could be due redress after the bank was fined almost £12.4 million by the City watchdog, which uncovered "serious failings" with the investment advice it gave customers.
The Financial Conduct Authority (FCA) found staff were not properly trained. In some cases, Santander staff claimed investments would "likely double" and gave the wrong information about the state of the stock market.
They also failed to adequately assess customers' personal circumstances and the level of risk they were prepared to take (see our Financial Fightback guide if you're unhappy with advice you've received).
The regulator says 295,000 customers sought investment advice from Santander between April 2004 and December 2012. But it's not known how many could be due redress.
The fine will come as a blow to Santander, which has been trying to turn around its reputation for poor customer service. In our latest banking index, Santander moved from rock bottom to second place for the service given to its 123 account customers, while the bank as a whole came fifth.
Santander stopped offering investment advice in late 2012 after concerns were raised by the regulator (see Banks not giving adequate advice MSE News story).
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What did Santander do?
The FCA investigation which included mystery shopping visits to Santander branches found the bank failed to:
- Ensure new advisers were properly trained.
- Properly monitor the quality of investment advice. Where poor advice was given, it was not always picked up.
- Make sure its advisers were fully getting to grips with customers' personal circumstances before making a recommendation.
- Provide clear information about products and services.
- Carry out regular ongoing checks on premium investments typically offered to customers with funds in excess of £50,000 to invest to ensure they were still appropriate.
In some cases, the FCA found Santander staff told customers their investments would "likely double" the amount invested and that "in 10 years it will beat cash by 87%", even though the investment term was only for five years and returns were not guaranteed.
Advisers were also incorrectly stating the level of the FTSE 100 shares index as between 8,000 to 9,000 in 2008. Yet it's never been above 6,930 points and that was in 1999 and during 2008, it plummeted at one point to 3,800.
I think I was given unsuitable advice. Can I get my money back?
Santander says it will write to all affected customers this summer, so you don't need to do anything yet.
If you miss the first letter, the bank says it will follow it up with further letters to ensure you have a chance to claim anything you're owed. .
If you don't get any letters by the end of the summer but think you were affected, you can contact Santander by phone on 0800 681 6684. Santander has also set up an investments help page on its website for those who may have been affected.
How much money could I get?
The FCA says stock markets have risen since many of these investments were first made, so it's likely consumer losses and therefore redress for some will be minimal.
However, that doesn't mean it isn't worth pursuing. Crucially, you don't need to pay a claims company to do this for you. Santander says the process for withdrawing your investment or having a sale reviewed will be "straightforward and free".
A timescale on redress and how it will be paid is yet to be finalised.
What does the FCA say?
FCA director of enforcement and financial crime Tracey McDermott says: "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."
What Santander says
Head of UK banking Steve Pateman says: "We regret that elements of Santander UKs historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns.
"We expect customer detriment to be low given the performance of the underlying investments and, as the FCA acknowledges, Santander has seen very few complaints from customers."
Additional reporting by the Press Association.