HSBC to pay £40m for mis-selling to elderly in care

The Financial Services Authority (FSA) has issued its biggest ever retail fine of £10.5m 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 £29.5m 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 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 per cent of customers involving these types of investments, with the total amount invested in the period hitting £285m, the FSA said.

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.”