David Prosser: Why HSBC should claw back the £3.8m bonus promised to its former chief executive

The man with whom the buck stops, ex-CEO Michael Geoghegan, got a £3.8m bonus last year

There are all sorts of reasons why HSBC's mis-selling of long-term care bonds wasserious enough to warrant the largest fine ever levied by the Financial ServicesAuthority on a retail bank, though just one of them says it all. The bank routinely sold savings plans with a five-year investment horizon to elderly customers who did not expect to live for as long as five years.

This is one of those cases where one wonders how City regulators everallowed them to get away with it, soobvious do the transgressions seem. Worse, HSBC might still be getting away with it today as far as the Financial Services Authority is concerned, for it was the bank that brought the problem to the attention of the regulator, rather than vice versa.

The regulator said yesterday that the size of its fine "should serve as a warning to firms". Well, maybe, though £40m (the cost of the penalty plus compensation for those affected) is loose change in the context of the £11.8bn profit that HSBC made during 2010 alone. A more useful deterrent would be regulatory action against some of the individuals concerned.

To start with, what has happened to the financial advisers who used to work for the HSBC subsidiary at the centre of this scandal, NHFA? Since these salesmen and women ruthlessly exploited vulnerable customers over a five-year period, it would be good to know they are now prevented from behaving in similar fashion at another company – the FSA can offer us no reassurance that this is the case. None of them has faced personal disciplinary action.

Then there is the man with whom the buck stops, the chief executive of HSBC during the period in which the mis-selling took place. That would be Michael Geoghegan, who stood down as chief executive of the bank at the end of last year.

HSBC should already be thinking hard about Mr Geoghegan, for half of the bonus it awarded him for 2010, worth a total of £3.8m, was deferred. On Friday, it emerged that Lloyds Banking Group is seeking to withhold some of the deferred bonus it had promised its former chief executive Eric Daniels, to reflect the exposure to payment protection insurance mis-selling that it has had to declare since his departure. HSBC's PPI exposure is much smaller than that of Lloyds – £270m compared with £3.2bn – but still substantial.

It may be that the bank does not consider its PPI problem serious enough to justify the clawback of some of Mr Geoghegan's bonus. If so this latest mis-selling scandal should trigger a change of heart. It is only when bank bosses pay a personal price for the misdeeds of their subordinates that they willreally start to take this sort of issueseriously enough.

Tui's performance flattered by Thomas Cook's failures

With Tui Travel's results coming so soon after the latest profits warning from Thomas Cook, the easy option is to characterise the story as a tale of two tour operators: the modernising, upbeat and profitable Tui versus the old-fashioned, depressed and in-need-of-a-handout Thomas Cook.

There is a bit of truth in that analysis. Tui is quick to point to the way it has refreshed its offer, with a morediversified and specialist range of holidays, many of which are gratifyingly high margin. It has also avoided piling on the debt, unlike its struggling rival, and is reaping the benefit of greater cost-consciousness, too. No doubt Tui will also get a lift from Thomas Cook's very public problems, on which it has sought to capitalise with some rather unsporting advertising.

Still, do not fall into the trap of thinking that all is rosy at Tui. For the detail of its trading makes miserable reading: in all but one of its key markets, winter bookings have slowed since the last time it updated investors at the end of September. In the UK, Germany and France, the decline in bookings compared to this stage last year is 12, 10 and 14 per cent – in September, the respective figures were 11, 2 and 7 per cent, so the decline is accelerating.

Nor does the picture look better for the summer of 2012. Bookings are off 11 per cent in the UK and 14 per cent in Tui's Nordic markets.

There is some bright news – the move to higher-margin deals is continuing, for average selling prices are stillrising. Tui also has encouraging news on further cost savings to come.

Still, this company is clearly notimmune from the recessionary headwinds buffeting customers in all its markets (not to mention the trend in the travel sector towards consumers booking their own holidays online, rather than through a tour operator). That sounds like a statement of the obvious, but the travel trade has long insisted – and Tui was again yesterday – that holidays are the last thing people give up when their household finances are squeezed. Even if the analysis is correct, Tui's numbers suggest we are reaching that time.

High street heading for a dismal festive season

No wonder so many retailers are running sales already. The headline number from the British Retail Consortium – a 1.6 per cent fall in like-for-like retail sales in November – is bad enough, but it understates very significantly the collapse on the high street. Remember that shop price inflation is running at about 2 per cent, which means real terms sales were even lower. And the groceries sector rose 1.5 per cent last month, so the decline across the rest of the retail sector must have been correspondingly worse.

Even in the online sector, the picture is deteriorating – notwithstanding the successful PR campaign to brand yesterday as "Cyber Monday" by retailers. Sales growth was a third slower last month. This is not going to be a merry Christmas for many.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015