Santander Bank Polska fined by the Polish Financial Supervision Authority. In total, over PLN 20 million
The highest sanction — PLN 7 million – concerned the execution of customer orders related to the “interest rate not higher than” mechanism.
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According to the supervisory authorities, the bank treated this solution only as an element of the loan agreement, while in practice it met the characteristics of a derivative financial instrument, the value of which depends on the level of interest rates.
Cooperation with unauthorized entities
The Polish Financial Supervision Authority also pointed to serious irregularities in the way customers are served. In years 2017–2021 the bank cooperated with third parties who did not have appropriate authorization to contact the bank on behalf of customers.
The institution's employees negotiated the terms of treasury transactions with them, provided information on exchange rates and documents regarding clients. According to the supervision, this could lead to: disclosing information covered by banking secrecy and limited the ability to control the customer service process.
Products that do not meet customer needs
The regulator also found that the bank concluded interest rate risk hedging transactions with clients even in situations where the instrument was for them inappropriate or were in the so-called negative target group.
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The Polish Financial Supervision Authority emphasized that financial institutions are obliged to act professionally and in the best interests of customers, and offering them products that are inadequate to their knowledge, experience or needs violates these standards.
Deficiencies in information about costs and the remuneration system
Some of the penalties also concerned lack of complete information on the costs of transactions hedging currency risk. According to the findings of the Polish Financial Supervision Authority, the bank changed the method of concluding such transactions, replacing some of them with FX Spot and FX Swap operations, which allowed it to avoid the obligation to inform customers in detail about the costs.
Supervision also questioned remuneration system for employees of the Treasury Services Departmentwhich made bonuses dependent on the level of sales of specific financial products. According to the Polish Financial Supervision Authority, such a solution could encourage employees to increase sales instead of focusing on the quality of customer service.
Problems with internal control and data archiving
The regulator also pointed out: ineffective internal control system and insufficient activities of the compliance function, i.e. supervision over the compliance of activities with the law.
Additionally, the bank did not fully store electronic correspondence sent to customers when concluding agreements on structured deposits – only system logs confirming the sending of documents were archived.
The decision is not yet final
The maximum possible penalty for each penalty in this case could have been more than PLN 2 billionbut ultimately the regulator decided on a total sanction of PLN 21.1 million.
Decision of the Polish Financial Supervision Authority is not yet finalwhich means that Santander Bank Polska may appeal against it.
