£10.5 million fine for HSBC
December 14, 2011 at 4:41 pm
HSBC has been handed a record fine of £10.5 million by the FSA (Financial Services Authority) for mis-selling bonds to elderly customers, many of whom were in care and vulnerable.
The problems arose with a subsidiary of HSBC called NHFA (Nursing Home Fees Agency). Between 2005 and 2010 the subsidiary provided advice to a total of 2,485 customers with an average age of 83.
Most of the customers were either in care or going into care, and NHFA advised them to buy five-year bonds to fund their care. However, it turned out that many of the customers were actually likely to die before the end of the investment term.
Each customer invested on average £115,000, and following a third-party review it was found that about 90% of the customers were unsuitable for the product.
As a result the FSA handed HSBC the record fine, and the bank is also thought to be paying out £29.3 million in compensation.
However, HSBC was given a 30% discount on the fine because it brought the problem to the attention of the FSA.
Because many of the customers were very elderly, it has been confirmed that any compensation which is due to people who have died will be paid out to their estates instead.
It has all left a very bad taste in the mouth, and hopefully this huge fine will prove to be a deterrent against this form of bad advice being handed out to people in vulnerable positions.
