LONDON | The British financial regulator, the Financial Services Authority (FSA), confirmed Monday that Santander UK was fined £1.5 million for failing to clarify under which circumstances its structured products would be covered by the Financial Services Compensation Scheme (FSCS).
The Spanish bank acknowledged that it could have replaced all product literature and training materials more quickly to reflect the FSCS position accurately. The fact that it allowed sales to continue with unclear key facts information was considered by the FSA as a serious breach.
Between late 2008 and early 2010, Santander sold approximately £2.7 billion of structured products, including £1.2 billion after June 2009. At that time, the British branch of Santander was aware that the circumstances in which its two products, Guaranteed Capital Plus and the Guaranteed Growth Plan, would be covered by the FSCS were limited.
Customers began to query the extent of FSCS cover towards the end of 2008, but it wasn’t until January 2010 that Santander explained in detail the extent of the protection clients were granted.
Tracey McDermott, acting director of enforcement and financial crime, said:
“When firms provide customers with literature about products, the information has to be correct and unambiguous. After all it is there to help people make informed decisions about whether to invest.”
Santander UK has conducted a customer contact exercise relating to all its structured product sales between 1 October 2008 and 6 January 2010, the period during which the breaches occurred. The FSA has not made any findings that these products were sold to customers for whom they were not suitable, and notes that investors in these products have not suffered any financial loss as a result of Santander’s failings.