Banks and credit card companies are still being punished for their mistreatment of customers during the early days of the financial crisis.
Spanish giant Santander is the latest big company to be hit by a giant penalty, having been fined $2.4 million for misleading thousands of savers with a complex savings plan at the height of the banking meltdown.
More than 178,000 savers put a total of around $4.3 billion into the Guaranteed Capital Plus and Guaranteed Growth Plan accounts on the understanding that the first $75,000 or so of their investment was protected. But it wasn’t. In fact the accounts were similar to the riskiest investments made by the now defunct Lehman’s, and were at risk if any banks went bust.
The fine is the latest to be handed out to a misbehaving bank. In the UK, the last year ordered banks to pay out more than $250 million in compensation to customers, three times the amount in 2010. The worst offender was Barclays who were ordered to pay out around $96 million to customers.
HSBC was also hit with a fine of around $16 million for mis-selling investment bonds to elderly customers. The law states that when firms sell financial services to people the information is ‘correct and unambiguous.’
Santander’s Guaranteed Growth Plan and Guaranteed Capital Plus sounded like normal savings plans, but were in fact linked to rises in the stock market and to controversial derivatives. The bulk of Santander’s customers were sold the accounts in their branches between the end of 2008 and early 2010 at the height of the financial meltdown. A spokesman for Santander said the bank did not agree with the FSA’s findings but would pay the fine to end the investigation.