Posted: 30th May 2014
On 24 March, Santander UK plc was fined £12m in relation to significant concerns about the quality of advice and communications with its retail customers. Much of the Final Notice highlights common failings for firms when giving advice.
Specifically, inadequate processes to gather sufficient information to support the suitability of its investment recommendations, inadequate processes for establishing the level of risk its customers were willing and able to take, customers were not provided with satisfactory explanations as to why the recommended investments were suitable for them, no formal process for undertaking the regular reviews of premium investments, which the marketing literature indicated was a fundamental element of the service, inappropriate procedures for monitoring the quality of investment advice and for taking remedial action where advice was found to be unsuitable and / or unclear and new advisers not receiving adequate training before giving advice to customers (new mortgage advisers take note).
Failings to their sales process and controls aside, one of the other notable findings relates to Santander’s response to the Wealth Management Review’s Dear CEO letter, which the FCA cited as overly positive and misleading.
Clearly Santander is not the only firm to ‘polish’ submissions to the regulator. If you take nothing else away from the Santander Final Notice, the FCA’s comments on this aspect serve as a useful reminder to senior management to ensure dialogue with the FCA is transparent and objective. A particularly important reminder in the FCA environment with the greater use of senior management attestations.