Bank fined £10.5m over mis-selling
Banking giant HSBC is set to pay out £40 million in fines and compensation after one of its subsidiaries sold savings products to elderly customers who were likely to die before the recommended investment period was up, the City regulator has said.
The Financial Services Authority (FSA) has issued its biggest ever retail fine of £10.5 million to HSBC after NHFA "inappropriately" advised 2,485 customers to invest in "unsuitable" investment bonds between 2005 and 2010. The FSA estimates NHFA customers will be paid a total of £29.5 million in compensation.
In a number of cases, the individual's life expectancy was below the recommended five-year investment period and as a result customers with shorter life expectancies had to make withdrawals from their investments sooner than recommended.
The products were sold to elderly individuals entering, or already in, long-term care and in many cases these elderly customers were reliant on the investments to pay for their care.
HSBC has apologised for what happened at NHFA, which closed for new business in July, and reassured affected customers that they would be contacted within weeks.
A review by a third party of a sample of customer files found unsuitable sales had been made to 87% of customers involving these types of investments, with the total amount invested in the period hitting £285 million, the FSA said.
The watchdog said NHFA, the leading UK supplier of independent financial advice on long-term care products to help pay for care costs, had not considered the individual needs of its customers and failed to recommend suitable products.
The failings were deemed significant as the customer base, with an average age of 83, was particularly vulnerable and a high number of customers suffered financially, with the average amount invested per customer coming in at £115,000.
Brian Robertson, HSBC Bank chief executive, said: "I fully accept that NHFA failed to give suitable financial advice to some of their customers. This should not have happened and I am profoundly sorry that it did."
"We are undertaking a full review of the advice given to impacted customers and I can guarantee that every customer who is found to have not been treated fairly will not be disadvantaged. At this stage NHFA customers do not need to contact us. We will be contacting them directly during the coming weeks with the aim of putting things right as quickly as possible."