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Santander fined £1.5m for FSCS cover breaches

Santander fined £1.5m for FSCS cover breaches

Category: Investments

Updated: 14/12/2012
First Published: 20/02/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Santander has been hit with a £1.5 million fine for failing to properly clarify on compensation cover on structured products.

The Financial Services Authority (FSA) found that the bank failed to confirm under which circumstances its structured products would be covered by the Financial Services Compensation Scheme (FSCS).

The FSCS is a scheme which protects people's investments and savings in the result of a bank going bust.

The regulator said that customers began to query the extent of FSCS cover from the end of 2008, but it took Santander until January 2010 to clarify the position.

During this time, Santander sold approximately £2.7 billion of structured products, including £1.2 billion after June 2009 when it had concluded the circumstances in which its two products, Guaranteed Capital Plus and the Guaranteed Growth Plan, would be covered by the FSCS were limited.

However, new customers were not informed of the limitation in FSCS cover until January 2010.

No investors actually lost money as a result of the failings, but the fine was handed down because Santander failed to meet proper standards of 'skill, care and diligence'.

The fact that it allowed sales to continue with unclear Key Facts literature contributed to the seriousness of the breaches.

"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," said Tracey McDermott, acting director of enforcement and financial crime.

"The extent of FSCS cover is important to customers, and firms must be clear about this in their Key Facts documents.

"Considering that sales of these products took place between 2008 and 2009, a time of financial uncertainty, Santander should have moved more quickly to confirm under which circumstances FSCS cover would be available."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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