HSBC fined £10.5m for selling wrong bonds to the elderly

HSBC bank has been fined £10.5m by the Financial Services Authority for selling unsuitable products to thousands of elderly customers in care. The Guardian says it is the largest ever penalty levied by the City watchdog for such an offence.
 
Almost 2,500 pensioners, whose average age was 83, were advised to invest in bonds to help them pay for their care by NHFA, a subsidiary of the bank.
 
The bank's customers were recommended to invest in bonds with a five year investment period when other products, such as high fixed rate savings accounts or ISAs, might have been more suitable. Some of the victims had been told that their life expectancy was less than the investment period.
 
The BBC says that NHFA was the leading supplier of independent financial advice on products to help pay for long-term care, with a market share of nearly 60 per cent.
 
Almost £285m was invested in the products suggested by NHFA, meaning each of the customers invested, on average, well over £100,000. The investments were sold by NHFA advisers, between 2005 and 2010.
 
HSBC said when it identified problems at NHFA it closed the subsidiary and alerted the FSA. Brian Robertson, chief executive of HSBC UK, said the bank was "profoundly sorry". It will pay £29.3m in compensation.
 
According to the Guardian, the FSA said that the fine was intended as a warning to other firms and would have been 30 per cent higher had the bank not co-operated with the investigation.
 
HSBC has reported pre-tax profits $11.5bn for the first six months of the year. ·