Santander Probed by FSA on Advice During Mystery ShopsKit Chellel
Banco Santander SA said it was being investigated by the U.K. Financial Services Authority over investment advice its staff gave to researchers posing as retail customers in so-called mystery shopper tests.
U.K. banks gave inadequate advice to a quarter of customers in its review last year, the agency said. It referred Santander to its enforcement division for further investigation, and told other banks to improve how they deal with customers.
Santander will “review how it can offer advice to its customers in the future for their benefit and provide access to appropriate investment products,” according to an e-mailed statement from the Madrid-based bank.
Banks including Barclays Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc have had to set aside more than 10 billion pounds ($15.6 billion) to pay back customers wrongly sold insurance on personal loans. A probe by the FSA into improperly sold interest rate derivatives may lead to another 5 billion pounds in compensation being paid to small businesses.
The regulator sent people, who didn’t identify themselves as representing the FSA, out to invest money at six U.K. banks. Employees gave them unsuitable advice 11 percent of the time, the agency said in a statement. Advisers didn’t gather enough information about the clients in 15 percent of visits.
“This review shows that customers are not consistently getting the quality of advice on their investments that they should expect when visiting an adviser in a bank or building society,” said Clive Adamson, FSA director of supervision.
Sarah Bailey, a spokeswoman for the FSA, declined to comment on Santander being referred to the enforcement division.
The FSA considered the advice provided to be poor, due primarily to inappropriate levels of risk, failure to consider customers’ circumstances and the length of time they wanted to hold an investment, according to the statement. This was the first time since 2008 the regulator did a mystery shopper test.
The British Bankers’ Association said while the majority of customers received good advice, more could be done.
“This exercise took place last year before the industry implemented new FSA rules which mean advisers are now better trained and are not paid commission for making sales,” the BBA said in a statement.