Fed terminates 2017 enforcement action against Santander

The Federal Reserve has terminated a three-year-old enforcement action with Santander and Santander Consumer, resolving its last remaining regulatory matter.

The enforcement action, issued in March 2017, was the last of three written agreements the U.S. arm of Spain's Banco Santander had to settle with the Federal Reserve. In this case, the Fed ordered Santander U.S., the Boston-based holding company, to strengthen its oversight of the $64 billion-asset Santander Consumer, its Dallas-based auto lending unit.

Bloomberg

In particular, the regulator said Santander Consumer needed to address deficiencies in its compliance risk management program and beef up board and senior management oversight of that function. The agency outlined its concerns in a 2015 written agreement, but issued the 2017 order because it said Santander had not made sufficient progress on those matters.

Santander has “made significant progress in strengthening board oversight, compliance, risk management, capital planning and liquidity risk management” since 2015, the company said Thursday.

“Today's announcement is an important milestone for Santander in the U.S. and speaks to the hard work and dedication of our colleagues across the US and particularly at” Santander Consumer, Tim Wennes, the CEO of Santander U.S., said in a press release.

Having resolved its last outstanding regulatory matter, the $150 billion-asset Santander U.S. is now free to pursue acquisitions or open new branches, activities from which it had been restricted.

In 2018, Santander resolved a separate regulatory matter with the Fed concerning firm wide deficiencies in board oversight, capital planning, risk management, compliance and liquidity risk management. That same year, Santander Consumer settled charges by California authorities that it failed to properly disclose certain referral fees to borrowers.

In December, Santander Consumer paid a $4.7 million penalty to the Consumer Financial Protection Bureau over Fair Credit Reporting Act violations. In that case, the bureau said that between June 2016 and August 2019 the auto lender knowingly supplied the three major credit reporting agencies with inaccurate consumer credit data.

In May 2020, Santander Consumer reached an agreement with a group of state attorneys general in which it paid $65 million in restitution and forgave nearly $500 million in car loan debt.