HSBC Fined for Elder Abuse

 

The U.K. Financial Services Authority fined HSBC Holdings PLC £10.5 million (its largest fine ever) for selling unsuitable products to elderly customers. HSBC was further ordered to pay another £29.3 million to compensate customers, who were advised to buy bonds whose maturity dates were longer than the customers’ life expectancies. (“HSBC Fined for Selling Unsuitable Products to Elderly,” Wall Street Journal).

An HSBC affiliate known as NHFA sold £285 million of bonds to about 2,485 customers between 2005 and 2010. The bonds typically had 5-year maturities. In addition to selling unsuitable investments, NHFA recommended withdrawals that were too high and depleted their clients’ principal.

HSBC apparently self-reported to the FSA. Otherwise, the fine would have been 30% higher.

“NHFA was trusted by its vulnerable and elderly customers. It breached that trust to sell them unsuitable products. This type of behavior undermines confidence in the financial services sector,” Tracey McDermott, the FSA’s acting director of enforcement and financial crime, was quoted as saying.

HSBC Bank PLC’s CEO Brian Robertson admitted that the misconduct in this matter “runs contrary to everything that we stand for.”

“We are undertaking a full review of the advice given to impacted customers and I can guarantee that every customer who is found to have not been treated fairly will not be disadvantaged,” Mr. Robertson was quoted as saying.

While Mr. Robertson’s “guarantee” seems fitting, it still leaves open the possibility that every customer who complains will receive the typical response that the firm has conducted a full review and found that it did nothing wrong. Time will tell.

Page Perry is an Atlanta-based law firm with over 170 years collective experience protecting investor rights and fighting Wall Street greed.