* FSA says refers a bank for enforcement action
* Santander UK could face fine or license changes -sources
* Santander UK reviews advice unit, 800 jobs at risk (Adds Santander reviews unit's future, jobs at risk)
By Steve Slater and Kirstin Ridley
LONDON, Feb 13 (Reuters) - Santander's British armis under investigation for possible investment advice failuresand could face a fine or license changes that prevent it fromoffering such services in future, four industry sources said.
Britain's Financial Services Authority (FSA) said onWednesday it had referred a major high street bank to itsenforcement division, the latest clamp-down on an industrytarnished by mis-selling and interest rate-rigging scandals.
UK banks are already facing bills totalling billions ofpounds from a series of misdemeanors, including mis-sellingpayment protection insurance (PPI), misleading customers aboutinterest rate hedging products and a global interest raterigging scam.
The FSA declined to name the lender and Santander UKdeclined to comment on whether it was being investigated.
The financial regulator said the probe, which followed spotchecks during a review of the quality of advice available at sixmajor banks and building societies, would only have been orderedif the company in question had a history of poor advice.
Shortly after this investigation was announced, Santander UK
said it was reviewing the future of its retail investmentadvice arm, putting 800 jobs at risk.
It told staff at a scheduled meeting in Birmingham, in theEnglish midlands, it was assessing its bancassurance business"given we can no longer be certain ... whether we willdefinitely continue providing face-to-face advice."
JOBS CULL?
Santander UK had suspended investment advice in December andpulled its advisers "off the road" for more training because ofnew rules in Britain aimed at making financial advice moretransparent for customers.
It said on Wednesday it would not take on new investmentadvice until it finds the right model.
The bank said no jobs were currently at risk, but said ithad consulted unions and was working with other business areasto ensure that many of those who might be impacted are able tosecure roles elsewhere in the group.
Four of its big rivals have already cut 3,500 advisers inthe past two years after reviewing their investment adviceprocesses ahead of the introduction of the new rules this year.
The FSA's new retail distribution review (RDR), which kickedin on Jan. 1, aims to ensure advisers are better trained andthat fees for financial advice are more transparent.
But banks argue the review contributed to their decisions topull back from investment advice while they assessed theadditional costs. Many now only offer advice to customers withmore than 50,000 pounds ($78,300) to invest.
Barclays cut just over 1,000 jobs, HSBC 800 positions, Lloyds 1,000 advisory positions andRoyal Bank of Scotland 618. Some banks said jobs wereredeployed.
The FSA has conducted a so-called "mystery shopping review"to do spot checks on the industry. The regulator said agents hadvisited six major lenders 231 times between March and September2012 to gather evidence about the quality of advice forcustomers keen to invest a lump sum.
Advisers at the lenders visited gave unsuitable advice 11percent of the time and did not gather enough information toensure suitable advice in 15 percent of cases, the FSA said.
"This review shows that customers are not consistentlygetting the quality of advice on their investments that theyshould expect when visiting an adviser in a bank or buildingsociety," said Clive Adamson, the FSA's director of supervision.($1 = 0.6385 British pounds) (Additional reporting by Matt Scuffham. Editing by SineadCruise and Jane Merriman)