HSBC fined for mis-selling to elderly in care
09 | 12 | 2011
HSBC has been severely criticised
and fined a record £10.3 million by the Financial Services
Authority (FSA) for giving “inappropriate investment advice to
elderly customers”.
The FSA found that just under 2,500
customers bought investment bonds from its subsidiary
NHFA between July 2005 and July 2011, investing on average
about £115,000 in long-term care bonds with a five-year term.
But, in around 87 per cent of cases
they looked at, the NHFA was found to have encouraged customers to
invest in unsuitable asset backed investment products such as
investment bonds to fund long term care when many of the customers
would have been better advised to put money on deposit to draw down
when the money was needed.
The average age for these customers
was 83. Typically, it is recommended that people invest in these
products for at least five years. However, many of the
customers affected had a life expectancy of less than five
years and started to withdraw from the investment sooner than
expected. A combination of early withdrawal and charges
imposed meant that their capital was eaten away more quickly
than should have been the case if they had been given proper
financial advice and sold appropriate financial products.
The bank has fully accepted that
some customers were given unsuitable financial advice and has said
it is profoundly sorry.
HSBC was expected to have to pay
out around £30 million in compensation to affected customers but in
a move announced on 8 December this is expected to rise. The bank
have pledged to examine cases of mis-selling to those who invested
in NHFA products as far back as 1991, 14 years before they bought
the investment advisor.
Malcolm Evans, Partner and Head of the Hugh James
Nursing Care department welcomed the unreserved apology but said
“HSBC was clearly trusted by its vulnerable and elderly customers
and it is deeply worrying to see that such trust was breached in
this way. I would urge the bank now to fully compensate those
affected, including the estates of those customers who have since
died, as soon as possible”.
The Hugh James Nursing Care Team
leads the field nationally in recovery of wrongly paid care home
fees. Our nursing care legal experts have successfully
recovered over £20 million for families across the UK.
Visit our Hugh James nursing care service page