‘FTSE a hundred is trading at 9000’: how Santander mis-offered investments

Enforcement action has been taken towards Santander right after the company gave poor investment advice

  Photo: Roy Lawe / Alamy

Santander has turn into the most recent large street lender to encounter a multi-million pound fine for widespread investment guidance failings.

This morning, the City watchdog fined Santander United kingdom £12.4m for offering unsuitable tips in its branches.

The fine comes following the regulator conducted a 12 months prolonged mystery shopping workout in 2012 across the UK’s banking sector. The watchdog stated it had unearthed shortcomings in the Spanish-owned bank’s advice on Isas, pensions and investment strategies.

In a 53-webpage report a series of failures are highlighted by the regulator.

The most eye-catching and disturbing is that economic advisers working at Santander branches incorrectly informed buyers the FTSE one hundred was trading amongst 8000 and 9000 at the height of the monetary crisis in 2008. At the time the UK’s major stock market place index was trading at just in excess of 5000.

Other misleading guidance statements integrated consumers becoming told their investments would probably double, whilst other folks have been told their investment returns were assured. In one particular situation a client was told their investment would beat cash by 87pc over 10 many years.

Buyers had been also led to believe that commission payments had been absolutely nothing to fear about. 1 example highlighted in the report stated a branch adviser told a client the 8pc commission payments levied on an investment had been irrelevant.

One more failure named and shamed mentioned some Santander advisers have been guilty of placing buyers into unsuitable investment goods. In 1 instance an adviser assessed a customer as a “high risk”’ investor, even however the customer had explicitly explained that they “did not want anything at all risky”.

Total the mystery shop discovered 22pc of advisers supplied misleading item details, even though 28pc gave misleading solutions on costs.

In response Santander stated it had responded swiftly to the troubles because the mystery shopping physical exercise was completed. The firm overhauled its branch primarily based tips support in December 2012 and has because enhanced its investment suggestions services.

Steve Pateman, head of Uk banking, at the firm, explained: “We regret that elements of Santander UK’s historic branch-primarily based investment income processes did not meet the needed regulatory requirements and apologise to any buyers who have issues.”

Santander mentioned it will now make contact with all affected buyers. For any product sales that are deemed substandard, compensation will be paid.

The fine is part of a drive by the regulator to stamp out poor practice. Above the past couple of many years a number of higher street banks and constructing societies have been caught misleading buyers with bad guidance about investment products.

Last yr, Axa Wealth, part of the worldwide Axa Group, was fined £1.8m for failing to give suitable investment advice to customers passed on to it from banks and creating societies. Barclays paid £7.7m for widespread investment suggestions failings on the sale of two Aviva funds in 2011.

At the commence of 2012 regulations have been overhauled in an attempt to clean up the industry. Fiscal advisers have been banned from taking commission when selling investment items in an attempt to eliminate bias and boost the tips being given to savers.

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