HSBC faces £40m bill after mis-selling to pensioners

Advisers told thousands of elderly people to buy policies they wouldn't live long enough to claim

Vulnerable elderly people were mis-sold unsuitable investment policies over five years by advisers working for the high street bank HSBC, it was revealed yesterday. The City Watchdog has imposed a record fine of £10.5m but the bill will actually be £40m after the bank was ordered to hand over £29m in compensation.

The Financial Services Authority said some 2,485 people were mis-sold investments by advisers from the Nursing Home Fees Agency (NHFA) between 2005 and 2010. HSBC had bought the advice company in 2005 and closed it in July this year.

The country's leading older persons' charity, Age UK, admitted it had accepted fees from NHFA for introducing potential customers. The charity said it was urgently checking its files to find out if any of its customers had been affected.

The FSA said the advice given by NHFA staff was unsuitable because many of the people affected – with an average age of 83 – had a life expectancy less than the recommended length of the investment.

As a result, when they had to withdraw cash to pay for care, they were hit by charges, meaning their cash shrank much more quickly than if they had received the right advice.

The Watchdog said NHFA had not considered the individual needs of its elderly customers and failed in many cases to recommend suitable products, such as higher fixed-rate savings accounts and ISAs. They also failed to consider the tax status of customers before making a recommendation.

Tracey McDermott, the acting director of enforcement and financial crime at the FSA, said: "NHFA was trusted by its vulnerable and elderly customers. It breached that trust to sell them unsuitable products."

HSBC said it would contact customers of NHFA in the next few weeks. Brian Robertson, the chief executive of the bank, said: "NHFA failed to give suitable financial advice to some of its customers. This should not have happened and I am profoundly sorry that it did. I guarantee that every customer who is found to have not been treated fairly will not be disadvantaged."

Age UK – created from a merger between Help The Aged and Age Concern – had a financial relationship with NHFA from 2003 until 2009.

Yesterday it distanced itself from the mis-selling scandal. Michelle Mitchell, the charity director of Age UK, said: "Help the Aged did not advise potential customers or have any input in investment decisions.

"NHFA were a major adviser in the area of funding care home fees and were trusted by many including Help the Aged. We are urgently reviewing the findings to see if today's announcement affects Help the Aged customers and how we can help them access compensation from HSBC."

Ros Altmann, the director general of Saga, said: "It is so distressing to see yet another large bank being found guilty of taking unfair financial advantage of trusting elderly people. One has to wonder how many such scandals have to occur before the regulator acts to prevent them happening in the first place rather than trying to sweep up the after-effects."

Start your day with The Independent, sign up for daily news emails
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
News
newsAnother week, another dress controversy on the internet
ebooks
ebooksA special investigation by Andy McSmith
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

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003