* About 30,000 customers may get compensation
* Could cost Santander tens of millions of pounds
* Compensation bill included in 232 mln stg provision in2012
LONDON, April 19 (Reuters) - Santander could payout tens of millions of pounds in compensation to some 30,000 UKborrowers for failing to explain clearly changes in interestrates on their mortgages.
The Financial Conduct Authority (FCA), launched this month to protect consumers more effectively than its predecessor, saidSantander UK must contact 270,000 customers about information itgave them before increasing the cap on its mortgage standardvariable rate (SVR) in 2008.
The FCA said only a minority of the borrowers would beentitled to compensation. Redress would depend largely onwhether they could have moved to a better deal.
Santander UK, part of Spain's Santander, said it set aside232 million pounds last year for several issues includingcompensation for mis-selling interest rate swaps and productssold through a card protection partnership deal..
A spokesman said the bank was confident it had set asideenough for the likely payouts but declined to give a figure.
The spokesman said about 30,000 mortgage customers couldhave a case for compensation, based on the structure of theirloan and because they were not told they could have repaidwithout incurring a charge.
A cap is the upper limit to which a lender can increase itsSVR, the rate of interest borrowers move on to after anintroductory deal comes to an end. In December 2008 the Bank ofEngland cut base interest rates by 1 percentage point, butSantander only reduced its SVR by 0.5 percent.
Lloyds paid out about 500 million pounds tocompensate about 300,000 customers in 2011 when it failed totell them clearly enough about a change to the cap on itsmortgage rate.
The FCA said letters Santander UK sent were not clear andthat borrowers may not have understood what was going to happen,how it would affect them and the options open to them. It saidsome borrowers did not even receive a letter.
Lloyds (LLOY)