The Financial Conduct Authority (FCA) has slapped Santander UK with a £12.5m ($20.7m) fine for giving poor investment advice.
The FCA conducted a year-long investigation into Santander’s investment practices after identifying problems during a ‘secret shopper’ exercise across the banking sector during 2012.
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The ‘secret shopper’ survey, consisting of over 230 visits to Britain’s six biggest banks and building societies, was carried out by the FCA’s predecessor, the Financial Services Authority (FSA).
The FSA said advisors often failed to identify the level of risk customers wanted 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.
Santander suspended the sale of investment products and investment advice towards the end of 2012.
The lender then said it would cut 874 investment advisor roles, leaving just 150 staff in ‘financial planning’ roles.
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By GlobalDataThe results of the ‘secret shopper’ survey were published during February 2013. At the time, 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."
Both Santander and the FCA declined to comment on the fine the lender is facing.
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