Exclusive: Santander UK probed over flawed advice-sources

Wed Feb 13, 2013 8:43am EST
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By Steve Slater and Kirstin Ridley

LONDON (Reuters) - Santander's (SAN.MC: Quote) British arm is under investigation for possible investment advice failures and could face a fine or license changes that prevent it from offering such services in future, four industry sources said.

Britain's Financial Services Authority (FSA) said on Wednesday it had referred a major high street bank to its enforcement division, the latest clamp-down on an industry tarnished by mis-selling and interest rate-rigging scandals.

UK banks are already facing bills totaling billions of pounds from a series of misdemeanors, including mis-selling payment protection insurance (PPI), misleading customers about interest rate hedging products and a global interest rate rigging scam.

The FSA declined to name the lender and Santander UK declined to comment on whether it was being investigated.

The financial regulator said the probe, which followed spot checks during a review of the quality of advice available at six major banks and building societies, would only have been ordered if the company in question had a history of poor advice.

Shortly after this investigation was announced, Santander UK said it was reviewing the future of its retail investment advice arm, putting 800 jobs at risk.

It told staff at a scheduled meeting in Birmingham, in the English midlands, it was assessing its bancassurance business "given we can no longer be certain ... whether we will definitely continue providing face-to-face advice."

JOBS CULL?   Continued...

A man uses an ATM machine as another talks on the phone outside a Santander bank branch in Madrid January 31, 2013. REUTERS/Susana Vera