CompaniesOct 29 2015

Santander sets aside £43m for further advice claims

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Santander sets aside £43m for further advice claims

Santander has set aside £43m to cover redress for investment advice claims following last year’s fine from the Financial Conduct Authority.

The provision was part of the bank’s third quarter management statement, which showed a £1.4bn increase in pre-tax profits over the first nine months of the year, from the £1bn reported during the same period last year.

The document stated that existing non-PPI related conduct provisions amounted to £195m, which included £43m of additional provisions taken in the quarter relating to wealth and investment products.

“The additional provisions were taken following the agreement of the revised approach to redressing portfolio and structured investment customers with the FCA. Outstanding provisions relate predominantly to wealth and investment products.”

This relates to historic sales of wealth and investment products for branch-based investment advice from Santander’s old bancassurance business between the start of January 2010 and the end of December 2012, or between April 2004 and December 2012 for Premium Investments customers.

In March 2013, the bank shut down its 800 adviser strong UK investment advice division as a result of a mystery shopping exercise by the regulator at the end of 2012.

In March 2014 the regulator fined Santander £12.4m for investment advice failings, particularly to do with its structured investments and range of risk-rated portfolios. This was after the FCA uncovered “serious failings” within advice procedures at the bank, which meant its approach to considering investor risk appetites was “inadequate”.

The bank had set aside £45m during 2014 to cover some of the claims. Its remaining provision for PPI redress and related costs were £48m for the third quarter.

Elsewhere in the statement, Santander said it expects net mortgage lending to grow in line with the market for the rest of the year. The decline in Standard Variable Rate mortgage balances, down by a net £6.2bn in the first nine months of 2015, were also expected to be broadly in line with the reduction seen in 2014.

peter.walker@ft.com