Updated January 26 at 10:26am

Santander fined $20.5 million by U.K. FCA on advice flaws

Banco Santander SA was fined 12.4 million pounds ($20.5 million) by the U.K. regulator for flaws in investment advice given to customers as the watchdog clamps down on misconduct in consumer lending. More

To continue reading this article, please do one of the following.



regulation

Santander fined $20.5 million by U.K. FCA on advice flaws

Posted:

LONDON – Banco Santander SA was fined 12.4 million pounds ($20.5 million) by the U.K. regulator for flaws in investment advice given to customers as the watchdog clamps down on misconduct in consumer lending.

The penalty, the biggest for the U.K. arm of Spain’s largest lender, follows a probe by Britain’s Financial Conduct Authority started more than a year ago. The watchdog found Santander failed to prevent customers from getting misleading information, didn’t carry out regular checks on customers, and didn’t ensure new advisers were properly trained before giving advice.

The FCA has clamped down on consumer banking services after issues including misselling of payment-protection insurance highlighted failings in the market. Lloyds Banking Group PLC was fined 28 million pounds ($46.3 million) by the British regulator in December for sales incentives that put employees under pressure to hit specific targets to avoid demotion.

“Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility,” said Tracey McDermott, FCA director of enforcement and financial crime. “Santander let its customers down badly.”

The Spanish bank received a 30 percent discount from the FCA because it settled at an early stage in the investigation. The full fine would have been 17.7 million pounds ($29.3 million). Santander has closed its investment advise arm as a result of the probe.

“Santander U.K. takes its regulatory obligations very seriously and has cooperated fully with the FCA’s investigation,” the company said in an emailed statement. “The bank had already identified a number of areas for improvement within its branch-based investment advice service and was working hard to address these.”

Spanish fine

The CNMV, Spain’s markets regulator, fined Banco Santander 16.9 million euros ($23.3 million) last month over “serious” failings in the way it sold convertible bonds to customers before the financial crisis.

The Spanish agency said the lender broke rules governing relations with clients and the information it had on customers, according to two rulings published in the official gazette on Feb. 17. The bank appealed, saying the CNMV approved the sale at the time.

In 2007, Santander sold through its branches 7 billion euros ($9.7 billion) of bonds that would mandatorily convert into its own stock to fund its purchase of ABN Amro NV’s Brazilian unit.

By the time the bonds were exchanged into shares in 2012, the stock had lost about half its value as Spain battled a financial crisis and recession. Investors at Santander’s annual shareholder meeting had called on executives to provide redress.

Banco Santander SA, U.K. regulator, consumer lending, banking, Santander, Lloyds Banking Group PLC, FCA, Financial Conduct Authority, Tracey McDermott, CNMV,

Comments

No comments on this story | Please log in to comment by clicking here
Please log in or register to add your comment
Latest News