HSBC fined Â£10.5 mln after elderly missold advice: regulator
Britain's financial regulator said on Monday that it had fined HSBC £10.5 million after one of the banking giant's subsidiaries missold financial retail products to elderly clients.
In addition to the fine, equivalent to 12.2 million euros or $16.4 million, HSBC has agreed to pay compensation totalling about £29.3 million, the Financial Services Authority said in a statement.
The FSA said the HSBC unit, NHFA Limited, had sold savings products to elderly customers with an average age of nearly 83 who were likely to die before the recommended five-year investment period expired.
"The Financial Services Authority has issued its largest ever retail fine of £10.5 million to HSBC because of inappropriate investment advice provided by one of its subsidiaries, NHFA Limited to elderly customers," said a statement.
"HSBC estimates that the amount of compensation to be paid to NHFA customers will be approximately £29.3 million in addition to the fine."
The penalty follows an FSA study of 2,485 NHFA customers Between 2005 and 2010.
"The advice and sales were unsuitable because in a number of cases the individual's life expectancy was below the recommended five-year investment period," said the FSA statement.
"As a result customers with shorter life expectancies had to make withdrawals from these investments sooner than is recommended."
The FSA added: "NHFA's customer base was particularly vulnerable. The average customer age was almost 83 and they therefore had limited means or opportunity to make up any financial loss resulting from an unsuitable sale."
HSBC senior executive Brian Robertson apologised for the bank's behaviour.
"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," Robertson said in a separate statement.
© 2011 AFP