Bereaved families were deprived of tens of millions of pounds left to them by their loved ones due to systemic failings at Santander bank, it has been revealed.
The Financial Conduct Authority (FCA) fined the bank £32.8 million after it found the firm failed in its duty to the relatives of deceased customers.
According to the FCA, over 40,000 customers were directly affected, and the bank failed to transfer £183 million in funds entitled to beneficiaries.
The FCA says it found the bank failed to disclose information relating to problems with the probate and bereavement process to the regulator after it became aware.
The problems occurred between 1 January 2013 and 11 July 2016 – breaching rules that stipulate banks must take reasonable care to organise and control the probate and bereavement process responsibly and effectively.
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The regulator says Santander’s probate and bereavement process reduced the ability of the firm to identify the funds of deceased customers, failed in effective follow-up communications with representatives of deceased customers and ineffectively monitored open probate and bereavement cases in order to determine progress.
The watchdog says as a result the process of probate and bereavement cases at the bank would open but sit incomplete, leaving funds stuck in limbo and not given to the people entitled to them.
It also says in some cases funds would not be correctly identified and those entitled to the monies would not be notified of their existence. In some cases funds were held by the bank for years leaving beneficiaries deprived of rightfully owed money.
Mark Steward, executive director of enforcement and market oversight at the FCA, says: “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.
“But recognition of the problem took too long. Firms must be able to identify and respond to problems more quickly especially when they are causing harm to customers. The FCA will continue to be on the lookout for firms with poor systems and controls and will take action to deter such failings to ensure customers are properly protected.”
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How Santander has responded to the failure
The bank has apologised to the families and beneficiaries of deceased customers affected by the failures.
It says it has now conducted a "comprehensive" tracing exercise to identify and transfer funds to the rightful beneficiaries, with compensatory interest "where appropriate".
The bank says it has conducted a "root and branch review" of its probate and bereavement process in the wake of the failures. In future representatives of deceased customers will be able to notify the bank of a death in-branch, via post, phone or online. The banks says they will only need to be notified once upon which the provider will manage the whole of a customer's portfolio.
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The bank now has a "dedicated bereavement team" with specialist training, with all cases handled exclusively by this team.
Nathan Bostock, Santander UK chief executive, says: “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.”
Santander says it has sought to identify and make contact with potential beneficiaries for every account affected. Any customer with a query can contact its customer services team on 0800 912 3123.
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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