Santander UK, is being probed in an investigation for falsely advising investors and fixing interest rates, Reuters reported.
The bank, the second-largest holdings for mortgages in the United Kingdom and rated one of the worst, directed high stakeholders to make investments. Now they're potentially facing a fine or getting its license revoked, according to sources who spoke with Reuters.
The British Financial Services Authority, FSA, found the bank falsely selling interest rate derivatives, according to Bloomberg. This is prompting banks like Barclays Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc to reimburse more than $20 billion to customers and small businesses who bought personal loans
The British Bankers' Association, BBA, told Bloomberg in a statement that much of the transactions happened before FSA enforced new rules, "which mean advisers are now better trained and are not paid commission for making sales."
The FSA created the retail distribution review, RDR, that began this January and is attempting to make sure advisers and transactions are more transparent.
The authority sent Bloomberg a statement on the operation, where they dispersed disguised regulators to six U.K. banks. They concluded the advisers were giving false recommendations almost 11 percent of the time and 15 percent of the visits were inadequate.
Santander's worsening repute is creating more dilemmas for the 800 jobs in retail investment that's bound to be cut if they don't take measures. Most of the advisers failed to invest time and care for customer concerns.
"This review shows that customers are not consistently getting the quality of advice on their investments," Clive Adamson, FSA director of supervision, told Bloomberg. "That they should expect when visiting an adviser in a bank or building society."
Santander UK previously stopped advising customers in December to retrain the advisers.
