The Financial Services Authority hit HSBC with the fine, its biggest ever for retail practices, after the bank’s NHFA advisory business wrongly told almost 2,500 of its clients to invest in unsuitable investment products for five years until 2010.
The FSA said it found the wrongdoing “particularly significant” because “NHFA’s customer base was particularly vulnerable”.
“NHFA was trusted by its vulnerable and elderly customers. It breached that trust to sell them unsuitable products. This type of behaviour undermines confidence in the financial services sector,” said the FSA’s Tracey McDermott.
NHFA’s customers, aged almost 83 years on average, were advised to invest in asset-backed products such as investment bonds to help pay for their long-term care at the time when they entered into residential homes or other care services.
But the bonds’ minimum five-year investment period was frequently longer than their life expectancy and the clients, who invested about £115,000 each or almost £285m in total, were forced to pay high fees and lose money to withdraw early.
“This should not have happened and I am profoundly sorry that it did,” said HSBC Bank chief executive Brian Robertson. The bank received a 30 per cent discount on the fine after agreeing to settle early.
Separately, HSBC said it would cut 330 UK jobs from its commercial banking operations as it restructures its regional presence.