The watchdog’s investigation found that 40,428 customers were directly affected, and criticised the lender for failing to disclose information relating to the issues with the probate and bereavement process to the FCA after it became aware of them.

The FCA said that between 1 January 2013 and 11 July 2016, Santander breached rules by failing to take reasonable care to organise and control its probate and bereavement process responsibly and effectively, with adequate risk management systems, and by failing to treat its customers and those who represented them on their death fairly.

Santander did not contest the FCA’s findings and agreed to resolve the case, therefore qualifying for a 30 per cent (Stage 1) discount. Were it not for this discount, the FCA said it would have imposed a financial penalty of £46,882,500 instead of the ultimate £32,817,800 fine.

Mark Steward, executive director of enforcement and market oversight at the FCA, 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. 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.”

The FCA’s findings showed that Santander’s probate and bereavement process contained weaknesses which:

• reduced its ability to effectively identify all the funds it held which formed part of a deceased customer’s estate;
• resulted in it failing to effectively follow-up on communications with deceased customer representatives which increased the likelihood of probate and bereavement cases not being closed; and
• led to it ineffectively monitoring open probate and bereavement cases to allow it to determine whether cases had progressed to closure.

These weaknesses meant the probate and bereavement process would start but:

• it would stall and remain incomplete, meaning that funds would not be transferred to those who were entitled to them despite Santander being informed that a customer had died; or
• certain funds belonging to deceased customers would not be identified and transferred to those who were entitled to them who were unaware of the existence of those funds.

The FCA said that in some cases, funds were held for many years contributing to beneficiaries being deprived of the use of them for a considerable amount of time.

In addition, Santander was found to take too long to address the issues within its probate and bereavement process, once it became aware of them, and to commence remediation exercises to transfer funds from affected accounts to beneficiaries.

Since 2015, Santander has carried out remediation exercises, to transfer funds from affected accounts to beneficiaries. These exercises are almost complete and where possible Santander has located beneficiaries and transferred funds to them (or is in the process of doing so).

Where appropriate, Santander has paid interest on the funds to beneficiaries to compensate them for the delay in their receiving the funds, together with compensation for any consequential loss that was suffered.

Santander also breached Principle 11 between 26 November 2013 (or reasonably soon thereafter) and 1 May 2015 by failing to disclose information relating to the issues with the probate and bereavement process to the FCA. Santander did not notify the FCA of the nature or extent of the issues it faced, including the numbers of potentially affected customers and assets, and was selective in the information it provided. Accordingly, Santander’s conduct fell below the standards of openness and cooperation expected of an authorised firm.