HSBC has been slapped with a $A16m (£ 10.5m) fine from the Financial Security Authority (FSA) for selling bonds to elderly customers, where in many cases investment periods were longer than the customer's life expectancy.
HSBC's subsidiary NHFA was advising some 2485 elderly customers, who were on average 83 years old, to invest in bonds to help pay off their long-term care costs.
Customers were recommended to invest for five years – a period longer than their life expectancy – and were therefore forced to pay penalty charges for accessing their money and received inadequate income from the plans.
“We thought that HSBC let down a particularly vulnerable group of customers,” FSA acting director, Tracey McDermott, told the BBC.
“They came to HSBC looking for advice for how to fund care home fees and they were sold in many cases, completely unsuitable products.”
A review by a third party of a sample of customer files found unsuitable sales had been made to 87 per cent of customers involving these types of investments.
HSBC is expected to pay a total of $A44.6m (£29.3m) in compensation to affected customers.
The company closed NHFA to new business on July 1.
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