Bank failed to treat customers and their next of kin fairly – Financial Conduct Authority

Santander UK has apologised after being hit with a £32.8m fine for holding millions of pounds back in deceased customer accounts up to 21 years after their deaths.

City watchdog the Financial Conduct Authority said the the high street bank failed to treat customers and their next of kin “fairly”, having stalled or failed to complete the probate process despite being informed of their death.

Probate refers to settling debts of a person who has died and distributing their assets in line with their will.

In some cases, people entitled to the deceased customer’s assets were not even aware they existed, as the bank failed to identify the funds. The FCA said 40,428 deceased customers were directly affected by the failings, with more than £183m having gone untransferred by Santander.

An internal review dating back to 1980 found that the longest period that accounts remained open after a customer’s death was 21 years.

In one case, the bank had two duplicate files on record but because of one having a default date of birth, it left an account holding £13,000 open without transferring any of the money to next of kin.

The longstanding cases predate Santander’s UK launch in 2004 but refer to customers it took on after Abbey National, Alliance & Leicester and parts of Bradford & Bingley were taken over or merged into Santander.

The FCA said Santander UK has since completed the probate process for 36,059 of those deceased customers through its own redress programme but should have dealt with the problem sooner.

Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “These failings took too long to be identified and then far too long to be fixed. To the firm’s credit, once these problems were notified to the board and senior management, they were fixed properly and promptly.”

While Santander started to internally review the issue in 2013, the FCA only became aware two years later when it pushed Santander for more information. “Such conduct is unacceptable,” the watchdog said.

The UK arm of the Spanish bank said it has conducted a “root and branch review” of its probate and bereavement processes, adding that it is now easier for representatives to notify Santander of a customer’s death and it has a dedicated bereavement team with specialist training in place.

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The FCA rewarded the bank for reaching a settlement early by cutting its fine by around 30%. It would have otherwise been facing penalties of £46.9m.

Santander UK’s CEO, Nathan Bostock, said: “Santander is very sorry for the impact these failings have had on the families and beneficiaries affected. We accept the FCA’s findings and have fully cooperated with their investigation.

“We have now transferred the majority of customer funds and made significant improvements to our whole probate and bereavement process, ensuring we provide both a sensitive and efficient service to our bereaved customer representatives and those who are managing the estates of people who have passed away.”

The watchdog said it is on the lookout for firms with poor controls and “will take action to deter such failings to ensure customers are properly protected”.