Spanish banking behemoth Santander has been fined £1.5 million by the City regulator for failing to disclose whether structured products were covered under the Financial Services Compensation Scheme (FSCS).
The FSCS covers cash deposits of up to £85,000 and collective investments of up to £50,000 if the provider goes bust.
The Financial Services Authority (FSA) says Santander customers queried the FSCS cover at the end of 2008, but the bank failed to clarify the right to compensation in its literature until the start of 2010.
During this period, Santander sold £2.7 billion worth of structured products, including £1.2 billion after June 2009 when it realised two structured products might not be covered under the scheme. However, new customers were not informed of the limited cover until the following year.
Tracey McDermott, acting director of enforcement and financial crime, says that giving customers ‘correct and unambiguous’ information about products is paramount.
‘The extent of FSCS cover is important to customers, and firms must be clear about this in their Key Facts documents,’ she says.
McDermott adds: ‘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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