FSA fines Santander for structured product failings
Santander has been fined £1.5m by the FSA for failing to inform customers of its structured products' status under the Financial Services Compensation Scheme (FSCS) in the period up to January 2010.
Investors began to query the extent of FSCS cover towards the end of 2008, but it was January 2010 before Santander clarified the position, according to a statement from the City watchdog.
During this time Santander sold approximately £2.7bn of structured products, including £1.2bn after June 2009 when it had found the circumstances in which its two products, Guaranteed Capital Plus and the Guaranteed Growth Plan, would be covered by the FSCS were limited.
The regulator said new customers were not informed of this limitation in cover until January 2010.
Santander has acknowledged it could have changed its product literature and training materials more quickly to reflect the FSCS position accurately and the fact it allowed sales to continue with unclear Key Fact literature contributed to the seriousness of the breaches.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, 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.
"The extent of FSCS cover is important to customers and firms must be clear about this in their Key Facts Documents," she added.
Specifically, the fine is in relation to breaches of Principle 2 - skill, care and diligence in business and Principle 7, communication with clients.
The FSA did not make any findings of mis-selling and said investors in these products had not suffered any financial loss as a result of Santander's failings.