Santander UK to reopen investment division
Santander UK has relaunched its investment division two years after it was shut as it was hit by a hefty fine by the FCA.Reuters

Santander UK has unveiled plans to return to the investment market and is set to offer in-branch investment advice to its customers for the first time in two years. Savers who can invest more than £50,000 will be able to count on a team of 225 advisers, based in the bank's largest UK branches, who will offer guidance on a number of topics, ranging from portfolio construction to tax management.

The advisers, however, will only be allowed to recommend the bank's own products, Santander said on 5 January, adding the cost of advice will be 2.5% of the amount invested, with a minimum fee of £500 and a maximum fee of £3,750.

The lender, which first hinted at plans to reopen its investment division in September 2015, also unveiled a new online investment platform, designed to offer customers access to over 2,000 investment funds. Santander said the service will be available to all of its customers at an annual cost of 0.35% a year on top of fund management costs.

The Spanish bank closed its British investment division, which employed approximately 800 people, in March 2013 as it was hit with one of the heaviest fines in retail banking after the Financial Conduct Authority questioned the way the lender assessed its customers' appetite for investment.

In 2011, Lloyds was fined £28m for the way its employees were incentivised to upsell the bank's services, while HSBC was hit with £10.5m fine after it was found guilty of misselling investment bonds to elderly customers

According to the Financial Times, the City regulator has since abandoned plans to carry out a study into retail investment advice, which has encouraged a number of high street banks to tap into the market again.

Santander UK is understood to hope the reopening of its investment branch will deliver a growth boost, as the bank aims to challenge the big four of the British banking industry - Lloyds, Royal Bank of Scotland, HSBC and Barclays.

"Online investing is likely to represent 25% 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," Alan Mathewson, managing director of wealth management at Santander UK, was quoted as saying.