British bank fined over mis-selling of investments bonds

2011-12-05 13:47

Britain’s HSBC bank has been fined £10.5 million (R131 million) for mis-selling savings products to elderly customers likely to die before they could claim their recommended investment, Britain’s financial watchdog said today.

The Financial Services Authority (FSA) said its biggest-ever retail fine relates to “inappropriate and unsuitable” advice on investment bonds given to nearly 3 000 customers between 2005 and last year.

In a number of cases, the individual’s life expectancy was below the recommended five-year investment period and as a result customers with shorter life expectancies had to make withdrawals from their investments sooner than recommended.

The mis-selling occurred at the bank’s subsidiary NHFA, which specialises in giving independent advice on products to finance long-term care.

HSBC identified the problems in July and alerted the FSA, while also closing the subsidiary to new business.

The bank said today it was “profoundly sorry” about what happened.

Experts said that the bank was likely to have to pay an estimated additional £29.3 million in compensation to customers.

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