A government-backed advice service earned money by pushing unwary people into the arms of the Nursing Homes Fees Agency, the HSBC-owned care fees adviser fined £10.5m on Monday for selling inappropriate investments to thousands to pensioners.
The news comes after leading charity Age UK yesterday admitted it had made money by passing its customers on to the shamed financial advice firm.
On Monday, the Financial Services Authority said that 2,485 people were mis-sold investments by NHFA, with the average age of those who purchased the bonds being 83. It reported that "a sample of [NHFA] customer files found unsuitable sales had been made to 87 per cent of customers".
It has emerged that HSBC-owned NHFA paid a wide range of charities and websites for leads so that its advisers could boost their commission by selling investments. Crucial among these was the government-funded Firststop Advice service, which was set up after the Office of Fair Trading called for a one-stop-shop for information on care home provision in 2005.
The establishment of the website and telephone advice line was led by the Elderly Accommodation Counsel, but fellow charities Age Concern – now part of Age UK – and Counsel and Care were also involved, as was NHFA itself, as the then biggest care fees advice company. The Firststop Advice service is now mainly funded by the Department for Communities and Local Government, receiving an estimated £200,000 a year from the government.
Its website offers a lot of useful information about housing and care options for older people. But it also includes profitable links to other organisations, including one to NHFA, which remained live as of last night even though the company closed for business in July. The service is quite open about its money-making ventures. Its website says: "FirstStop will receive a portion of any revenue generated as a result of business conducted through the [NHFA] service."
Yesterday the service said it would be rechecking the credentials of all the companies it recommends to avoid the prospect of more vulnerable people being mis-sold investments.
But it added that the fact that NHFA had the backing of a major bank and was authorised by the FSA lent the company a high degree of authority.
Last night, the City Watchdog defended itself against accusations that it had allowed the mis-selling to continue for five years. Tracey McDermott, acting director of enforcement and financial crime at the FSA, put the blame for the mis-selling squarely at the door of HSBC. She said: "The responsibility for monitoring NHFA's sales was with HSBC. The FSA cannot look at every transaction."
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