Santander UK's Bancassurance division could have its days numbered as the bank considers its strategic options in light of the Retail Distribution Review's (RDR) provisions on face-to-face advice, a move that could put more than 800 jobs at risk.
"We are considering the findings in the context of the significant actions we took in 2012 to prepare for the post-RDR world," a Santander spokesperson told SRP. "We continue to believe it is important to offer customers access to a broad range of financial products which are suitable to their needs and individual situations, and we are working towards that objective."
Santander said in a statement that it will continue to review how it can offer advice to its customers in the future for their benefit and provide access to appropriate investment products. "Santander will explore all options, given its heritage, its customer base and the importance of access to assistance and advice for all UK consumers in protecting their financial well-being," it said.
Santander confirmed that it will continue to provide advice to existing customers with maturing investments through a team of around 130 advisers, but has decided not to pursue new business until it can find the right model for the bank within the new regulatory framework.
"We have delayed our plans to offer face-to-face advice to a broad base of our customers because of the regulatory expectations post the Retail Distribution Review, the further investment that would be required and the length of time needed to complete that investment," it said.
"However, given that we can no longer be certain with regards timeframes and whether we will definitely continue providing face-to-face advice, we have told all staff within the Bancassurance division that we are reviewing the strategic options for the business."
Santander UK's decision to review its investment advice arm comes after a number of UK high street banks exited the advisory arena to meet the requirements of the RDR. Barclays was the first big bank to halt financial advice to customers at its branches in January 2011, and stopped selling structured products through its specialised structured products provider subsidiary, Woolwich Plan Managers, a year later on 31 December 2012.
Barclays has now migrated its structured investment products to the bank's unbundled format, which will be sold through third party wrap platforms and stockbrokers as part of the overhaul of its distribution strategy in the independent financial adviser (IFA) market.
Investec unveiled its RDR model aimed at servicing the different adviser models in November last year.
Other banks retreating from providing advice in the high street include Lloyds Banking Group which offloaded its mass market investment advice service last September, and now offers advice only to customers with more than £100,000 to invest.
HSBC announced in April last year that it was axing its advice service while continuing with its whole-of-market advice and execution-only services; and in June, the Royal Bank of Scotland announced the closure of its IFA arm and moved to a restricted advice model.
Santander UK stopped selling structured products through its adviser unit in December 2012. On Wednesday, the bank announced that it is rethinking the provision of advice to customers.