Santander UK has restarted branch-based investment advice two years after it was hit with one of the biggest ever retail banking penalties for giving unsuitable advice to customers.
According to FTAdviser parent paper the Financial Times, the bank plans to have 225 advisers across the country by the end of March.
Santander announced the closure of its bancassurance division in February 2013 after the Financial Services Authority found serious failings in the way the bank assessed customers’ risk appetite.
The following month, the bank informed 874 staff that their jobs were at risk, and they would be made redundant on 7 May 2013 unless other roles were found.
At that time the FSA conducted a mystery shopping exercise, finding roughly a quarter of financial advice given by retail banks and building societies was unsuitable.
In April 2014, the regulator confirmed in a final notice Santander had been fined £12m due to not providing clear information about its products and services, not carrying out ongoing checks on investments, not ensuring new advisers were properly trained and failing to properly assess customers’ appetite for risk of customers before making a recommendation.
At the end of October 2015, the bank revealed it had set aside £43m to cover redress for investment advice claims relating to wealth and investment products.
However, in the last few months, signs from the regulator have encouraged banks back into the advice space, not least the FCA dropping its review of culture at UK retail and wholesale banks just before the New Year.
Santander’s return came after Personal Finance Society chief executive Keith Richards told FTAdviser that a number of big institutions will re-enter the advice sector in 2016, as they have the resource to build expediently on a national basis.
He noted the Financial Advice Market Review showed the government and regulator was ready to consider increasing access to advice for the mass market through things like safe harbour and robo-advice.
Nathan Bostock, chief executive of Santander UK, told the FT that the launch was “another crucial element to establishing relationships with customers”.
The bank’s new team of investment advisers can only recommend in-house products and will cater for customers with more than £50,000 to invest.
Advisers will be based in the bank’s largest UK branches, representing about one in four of its 900-strong network.
Santander UK is also set to launch an online investment platform, which will provide all customers with access to more than 2,000 funds across the market.
Alan Mathewson, managing director of wealth management at Santander UK, said: “Online investing is likely to represent 25 per cent of the UK investments market over the next couple of years and as a scale challenger, we want to be at the forefront of this trend, providing a simple and convenient way for our customers to access the investment market.”
peter.walker@ft.com
