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FSA fines HSBC £10.5m over misselling to elderly customers

The FSA has issued its largest ever retail fine of £10.5m against HSBC because of inappropriate investment advice provided by one of its subsidiaries to elderly customers.

HSBC estimates that the amount of compensation to be paid to Nursing Homes Fees Agency customers will be approximately £29.3m in addition to the fine.

Between 2005 and 2010 HSBC subsidiary NHFA advised 2,485 customers to invest in asset-backed investment products, typically investment bonds, to fund long-term care costs for elderly customers. The products were sold to individuals entering, or already in, long-term care and in many cases these elderly customers were reliant on the investments to pay for their care.

The average age of NHFA’s customer base was almost 83. The total amount invested was close to £285m, putting the average amount invested per customer at approximately £115,000.

In June, HSBC announced it was to close NHFA to new business as it “no longer forms part of the group’s strategic direction”.

The advice and sales were unsuitable because in a number of cases the individual’s life expectancy was below the recommended five-year investment period. As a result customers with shorter life expectancies had to make withdrawals from these investments sooner than is recommended.

The combination of withdrawals and product charges led to faster reduction of capital than should have been the case if customers had received the right advice.

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.

The FSA says it was clear NHFA had not considered the needs of its elderly customers and failed in many cases to recommend more suitable products such as higher fixed interest rate savings accounts or Isas. NHFA also failed to consider its customers tax status.

NHFA’s market share of the long-term market was nearly 60 per cent, in the years leading up to the subsidiary’s closure in June.

The misconduct occurred over a period of five years.

FSA acting director of enforcement and financial crime Tracey McDermott says: “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.

“HSBC, who owned NHFA, has now recognised the issues and taken steps to do the right thing. They have been given credit for that – but for some customers it will be too late.

“This penalty should serve as a warning to firms that they must have the right systems and controls in place to manage and identify risks when they acquire new businesses. A failure to do so can lead not only to detriment to their customers but to significant reputational and regulatory cost.”

HSBC chief executive Brian Robertson says: “I fully accept that NHFA failed to give suitable financial advice to some of their customers.  This should not have happened and I am profoundly sorry that it did.

“We have high values here at HSBC and this runs contrary to everything that we stand for.  That is why when we suspected something was not right at NHFA, we took action.  We advised the FSA of our findings and closed NHFA to new business on July 1, 2011.

“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.”

HSBC will be writing to existing NHFA customers advising them of the closure of the business. Customers whose files are being reviewed will be informed within their letter, and HSBC will write to customers again to let them know the outcome of the review.

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Comments

There are 51 comments at the moment, we would love to hear your opinion too.

  1. Another fine example of how the banks can be trusted. Just think of the field day they will have post RDR………

  2. Why the “Investors best friend” from HSBC advert in the middle of the report?
    Yet another bank based scandal. The same question regarding targeted bank product sales managers and staff applies is it “the sty that makes the pig dirty or the pig that makes the sty dirty” ?

  3. Well done FSA (on this occasion).

    Keep looking………….there’s more.

  4. Yet again another bank gets fined in the millions, has even more millions to pay in compensation, this time for mis-selling to elderly, vulnerable people and the FSA deem that to be enough. When are they (FSA) going to get tough and take up criminal proceedings against the senior managers in these organisations. Until they do nothing will change. You can bet if it were a small IFA or smaller network individuals would have been fined and banned from the industry.

  5. what about the advisers individually? Oh that’s right around 400 of them were made redundant. I guess they’ll just crack on with giving tied ‘advice’ with a different name above the door……..

  6. Same old story, Banks and miss-selling.

    Dear FSA why are they not de-authorised, any small firm which systematically miss-sold one product would be shut down. Why do you allow Banks to do it time and time again, if you don’t address this question how can we come to any other conclusion than it is because you are in their pockets.

  7. £10.5 million fine may sound big but in fact it’s nothing more than a parking ticket to a firm that makes billions of pounds worth profit a year.

    What we should be asking is where are the banning orders and indeed the fines on individuals, particularly those in management control positions.

    When is the regulator going to start to treat Banks in the same way as they treat IFA and Mortgage Brokers?

    I read with interest every week a banning order for a small IFA practice or Mortgage Broker, but no such banning orders or prosecutions for bank directors or senior management.

    I wonder if the response from the FSA would be that nobody at these firms are directly responsible or indeed at fault? SURELY THAT CANNOT BE TRUE!

    It would be interesting if Money Marketing would do a Freedom of information act request to find out how many bank employees have been banned or individually fine since 2007?

    Then compare this with the number of IFA or Mortgage Brokers, I think the results may be interesting and show considerable biased towards the Banks, no wonder they’re so arrogant and act so irresponsibly!

    Answers on a postcard please

  8. Before you put all the blame on HSBC not doing due diligence when they bought the business, which is pretty obvious, I would also ask what on earth the FSA were doing as NHFA was directly authorised from 2005 to 2010. If, as it appears, that the level of misselling was so high, surely someone in the labyrinth of Canary Wharf could have picked this up far sooner?

  9. Is this right? If you are 83 or older the FSA now says that you are not allowed to invest in anything except deposit accounts where the real value of your money will erode. Even though you could live another 20 years?

    What about if you already have investments – should we be advising our older clients to cash in?

    Before we indulge in the schadenfreude of a big bank getting a slap we should consider what this could mean for our own businesses.

    If markets had risen constantly since 2005 would this review have happened? I think that this is just a case of the FSA regulating retrospectively yet again and moving the risk from the client to the adviser.

  10. Dear Chippy Minton

    I think you’re missing the point entirely or maybe you’re a bank employee!

    The fact is these individuals were either in long-term care or about to go into long-term care this means that selling a structured bond would have been totally inappropriate. If these individuals were looking for advice then I hope that an IFA would look at the appropriate long-term care annuity product or investments that allowed the investor income and accessibility as this would be more appropriate.

    The fact is that these structured bonds would have been for a fixed term of five years with no accessibility without penalties – I would hope no self-respecting IFA would recommend that type of product to a client who is in a vulnerable situation. If they do then they deserve to be fined and banned along with the bank advisers and senior management, as we don’t need them in our industry.

    I like the way you also hide behind your real name when coming up with such a ridiculous comment

  11. Largest ever retail fine!

    However nobody censured, fined, banned!

    As others have noted a smaller organisation would have had permissions rescinded, the directors would have been fined and probably fined as well and the company driven out of business.

    What is the pay-off for the FSA, cushy jobs for the management when they decide to leave the regulator?

  12. What went on at NHFA is a little more nuanced than this article suggests. I worked for the firm from the early 2000’s for around 8 years. The firm generally did its best for its clients and I say that even though there was no love lost between us when we parted.

    When I joined there were loads of with-profit bond type investments or investment bonds with death benefit guarantees. These were sound recommendations for older clients because if they lived a long time they had the benefit of a cautious investment but if they died early they benefited from high allocations + 101% of fund value. One client in an MGM Celebration bond actually made 9% in six months just by dying! This approach sounds hopelessly old-fashioned now and was tax inefficient, but clients liked the security it gave.

    The problem at NHFA came because this approach was never modernised. They took all the commission upfront because many clients life expectancies were short making trail redundant but they never incentivised the advisers to carry our annual reviews. In fact, doing an annual review was really difficult.

    A significant amount was invested in property funds and in 2007 NHFA gave its advisers no help or guidance on what to do. In fact, its compliance department made fund switches close to impossible.

    This was not a company of high pressure bank salemen attempting to rip off the elderly. It was a firm of professional IFA’s trying to do their best for their clients in difficult circumstances whilst a large bank gradually pulled the rug from under them.

    If HSBC had considered what it had bought and had actually invested some of the cash that it is now paying in redress, if it had ever listened to what it’s IFA’s were telling it, this could have been an excellent business and they could have dominated the long term care market. They squandered that opportunity.

  13. Before all of the back slapping starts detailing how great IFAs are and throwing rocks at banks, HL, SJP and providers for doing such a horrific job. NHFA were until recently a firm of IFAs, HSBC only bought them a few years back. The same advisers who were there before they were bought out were the same advisers who where there after.

    Before you start congratulating yourselves about what a good job IFAs do compared to banks, have a think about the elderly people who lost their money because of bad advice from their IFA.

  14. Dear Anonymous,

    “Same old story, Banks and miss-selling” I think you will find that the FSA are all ex-bankers and that they will never remove their advise licence as they pay massive fees to the FSA. Its cost effective for the Banks to say sorry with a massive compensation payment and a fine!! No Justice for the small

  15. Anoymous 11.57

    As previously stated if an IFA or Bank Adviser is found doing this then they both deserve to be banned!

    That’s the point at present is only the IFA that seems to be getting banned!

    Yes and I do feel sorry for the millions of people that have been mis-advised by big banks. Not only on structured bonds but also on PPI insurance 9 billion of compensation and counting.

    No banning orders or prosecutions!

  16. Dear Peter Herd @11.48am

    Perhaps you worked for NHFA as you clearly have some inside knowledge that isn’t in the article. I cannot see where it says that NHFA were selling structured products. If they were I would totally agree with your comments but if you bother to read it the article actually says they were selling investment bonds.

    My point is that as IFA’s we need to understand what this means to our own businesses. Is the FSA going to look at investments to elderly clients unfavourably if markets fall, especially if their average life expectancy is less than 5 years?

    If so, that could be quite worrying to advisers with older client banks.

    Personally I felt that was a more constructive comment than your own. At least I read the article – you would do well to do the same as you can look a little silly firing off allegations that don’t quite stack up!

  17. Look!

    Let’s get this clear.

    Everything we say, everything we do, every product we recommend can, with hindsight be seen to be flawed, unsuitable, inappropriate or whatever designation those who rule our industry ascribe to it retrospectively.

    I would dearly love some provider in our industry to step up to the plate and deliver the following:-

    1. Investments which don’t go down in value and have no such things as MVRs
    2. Investments whose charging structure is based on the amount of growth / profits generated instead of the original capital
    3. Investments which have a clear and unambiguous intention (Growth/ Income) and which can be seen to be constructed in such a manner as the intent is achievable.
    4. Protection products such as Income Protection at a reasonable price, based on the actual risk rather than age of clients.
    5. That the regulatory body of the industry be made accountable for its actions and any unintended consequences which cause either consumer or adviser detriment, but which were obvious to start with.

    Applications to join La La land accepted by post card only please

  18. IFA or not its big business that drives the ‘go get’ attitude or targeted sales which is bound to be flawed once scrutinised.

    A thought for you, when the automobile industy was booming in the 50’s – 60’s a certain manufacturer of global proportion carried out a cost excercise comparing the porbable redress with the recall of a HUGE number of cars that had a design fault.

    The executives chanced with redress, they continued for years knowing the design fault was there.

    The number of decapitated children from faulty glove compartment doors eventually twindled away.

  19. I was an adviser for NHFA for many years. Not once did I stitch anyone up, especially the elderly. I took great care in what products I was recommending to make sure they were not only suitable for my clients circumstances but also that they had the full approval of any family member. I never sold a structured product. The investments I used, if they were not annuities, were always in open-ended bonds which has no fixed period. There were never any penalties on death and in a vast number of cases the estate received back more than was originally invested. NHFA have been made to look as though we did not care about our clients when quite the opposite was true. We never pushed a client into purchasing a product, but explained the options which were available to them so they could make an informed choice. We rarely received complaints which is more than can be said for a number of institutions. In fact, the letters of thanks we received were numerous. We have now been portrayed as some kind of crooks. I myself know that I can still hold my head high with the knowledge that what I did was not wrong.

  20. I agree that a £10.5million fine is like lose change
    It stinks that IFA’s be fined or end up losing their business on mis-selling, yet NOBODY at HSBC gets hung out to dry,why, is it because the Banks and the FSA are all on and “we can’t shit on”family”
    I noticed on other site that the oldest person was 93, they were sold a 5 year plan yet they only had a life expectancy of 3yrs 3mths !! Doesn’t get any worse than that

  21. Ironman Chris – I suspect that much of your own advice could be looked at with minimal knowledge and made to look bad.

    However, if you were to say an investment for a 93 year old where the sole beneficiary was 75 and intended to retain the investment to provide herself with an ongoing income the advice looks correct again.

    The was an IFA not a bank. We did the right thing for our clients.

    I’ve not seen this reported anywhere but NHFA advisers DID NOT HAVE SALES TARGETS. It is the only place I have ever worked where there was no pressure put on business production by management.

    Trying to re-cast NHFA as the bad guys, just because they were bought by a big bad bank is sickening.

  22. Totally agree and support comments above relating to the fine and then non sensoring /fining of the directors resposible for running NHFA,

    When are the FSA going to show their real teeth against these senior managers ?

    I await to see their response with interest

  23. Could one of the ex NHFA posters clarify whether the use of investment bonds was to utilise “set asides from capital” loophole on means testing.

    Thank you.

  24. Hi Simon, No it wasn’t because the people concerned were all too far down the route to needing care. That would have been regarded as deprivation of capital.

    Originally bonds were used because of their charging structures. Remember the days when they gave 100%+ allocation and no penalties on death. These made them ideal for people funding care as the insurers effectively paid the costs if the person died in the short term.

    As I said in an earlier post, NHFA’s problem was that the investment process was never modernised as products changed. Some of the bonds sold more recently were really expensive and much worse value than OEICS/ISA’s and less tax efficient.

    However, even these products were not terrible and I can’t help but think that this review would not be happening if investment markets had risen.

  25. To Simon Kershaw – ABSOLUTELY NOT!

  26. I know several ex-NHFA advisers. Of one thing I am sure – I’d love to know the full background to why the FSA decided to investigate; the situation is not as simplistic as the article would have us believe.

    The advisers I know were always trying their best to provide a professional and ETHICAL service to people in a vulnerable position where the correct financial advice was needed. I know of letters of thanks from clients going to NHFA advisers for the service they gave to clients, saying that they wouldn’t have been able to cope without the NHFA adviser’s help.

    NHFA gave prospective clients the option to go the commission route or the fee route. The vast majority of clients, be they the person in need of care, in care or the attorneys did not want to pay fees – they wanted to go the commission route.

    Ex-NHFA adviser is correct when saying,

    “This was not a company of high pressure bank salemen attempting to rip off the elderly. It was a firm of professional IFA’s trying to do their best for their clients in difficult circumstances whilst a large bank gradually pulled the rug from under them.

    If HSBC had considered what it had bought and had actually invested some of the cash that it is now paying in redress, if it had ever listened to what it’s IFA’s were telling it, this could have been an excellent business and they could have dominated the long term care market. They squandered that opportunity.”

    and

    “Trying to re-cast NHFA as the bad guys, just because they were bought by a big bad bank is sickening.”

    Well said, well said.

    Part of the problem could be that we seem to have a collective head up collective rear end when it comes to paying for residential care in the UK. The costs are high (up to £1000 per week is not unusual) and the commitment is open-ended; we haven’t brought in euthanasia quite yet, thankfully. It’s as if we fail to understand the true financial cost of residential care, and nor, it would seem, does the FSA. The number of financial products available to provide the level of income needed to pay care fees for an open-ended number of years, at low-risk to capital is limited.

    And FSA hindsight of a supposedly perfect world to provide perfect advice in is another thing altogether.

    The NHFA advisers I know can hold their heads up as they have done nothing wrong; just tried to do their best for vulnerable people needing financial advice in a part of the market where it is vital, yet the major banks shy away from it more and more and even the regulator can’t seem to grasp the financial realities of this sector of society.

    One thing that seems to be forgotten in all of this is that there is not one single person who has been forced out of a care home place due to advice from NHFA. Care fees are paid. Unlike the care home closures due to the greed of the likes of Southern Cross ownership. Now there is a true financial scandal.

  27. Then again, the high use of Investment Bonds for the elderly could be because they are “disregarded assets” (unless deliberate depravation rules apply) when funding long tern care costs. I’m not justifying their advice but it seems that the FSA might just have taken the blanket view that new bonds and old clients just don’t mix !!

  28. So Catherine,

    Explain to me why such a brilliant firm got fined £10.5 million

    I’ve never worked for NHFA but I’ve always found it surprising how many advisers in the industry still sell investment bonds on the basis that as insurance policies they are not taking into consideration for long term care assessment.

    The problem with this myth is that investment bonds if you acted with the knowledge of going into long-term care can be undone with the deprivation of a state rules which many local authorities can enforce through the courts.

    Could this be the reasons why NHFA found themselves in such hot water particularly if they were selling these bonds to people who either non-rate for basic rate taxpayers.

    It’s interesting to note that nobody from NHFA has chosen to respond to Simon Kershaw earlier post!!!!

  29. Well said Catherine. I must thank you for showing the other side of this scandal.

    The scandal is not what the NHFA advisers sold it is how they are being portrayed and mis-represented.

    The bank bought us, chewed us up and spat us out. They have no understanding of the legislation surrounding care and the trauma that people go through when their loved ones go into a home.

    I sincerely hope that one of my many satisfied clients reads all that is being said about NHFA and responds accordingly.

  30. Appears we have yet another FSA effort to blankett regulate. On what grounds do they decide that this advice is wrong.

    A great deal of this type of advice is done with the elderly, their family and solicitors/accountants. Most of them are content with the advice.

    Reading this srory on other sites the inferrence is that HSBC alerted the FSA to the problem??????

    And Peter Herd – whilst it is lovely reading about your expert technical knowlege (something we all have) until you have actually seen the advice you and indeed none of us have a right to comment. Unless that is you work for the FSA then you have all the rights and the rest of us have none.

  31. Dear Darren

    I still waiting for a response to both mine and Simon Kershaw question.

    Maybe you’d like to show us some of your technical knowledge and explain

  32. Peter Herd @ 3.33pm

    Maybe you should learn how to operate your browser scroll up the page before you claim that no-one from NHFA responded to Simon Kershaws earlier post.

    You’ve made yourself look rather foolish.

    In response to your “Why has such a great company…?” question I find it puzzling that everyone on here hates the FSA and thinks that everything they do is seriously flawed UNTIL they criticise a bank when, of course, they are brilliant.

    Peter – just think about the implications that these retrospective reviews could have if applied to your business. That’s what worries me.

  33. Dear Darren

    Last time I checked Accountants and Solicitors were NOT regulated to give advice on investment bonds unless specifically authorised to do so?

  34. Peter Herd

    For someone who clearly has a lot of time on his hands you don’t appear to read these posts very clearly. Darren made it pretty clear that the solicitor/accountant was part of the advice process not the adviser.

  35. I could answer that one Ex NHFA Adviser but I guess I’m not having to hide my name!

    Investment bonds selling just like pension transfers do of course suit some clients the problem is that all too often it is done for the benefit of commission or the benefit of the adviser rather than the client.

    I’m afraid I am a great believer in tough regulation although at present we don’t seem to find that that regulator is treating all sides of the industry with the same rigour.

  36. To Ex NHFA Adviser

    So post RDR what does advice process mean?

    Believe me after 2012 all financial advisers will be wanting to see greater enforcement of the Financial Services Marketing Act 2000 to protect our trade, rather than letting Accountants and Solicitors give advice, only to see their clients enact it on an execution only basis.

    Anyway eough entertainment for the day

  37. Peter

    You’re sticking your head firmly in the sand if you think that the kind of retrospective review that has been carried out on NHFA cannot be carried out on your business.

    It’s fine to be smug when you’re looking at someone else getting a slap but I bet if I were to review your files from six years ago and apply today’s standards to them I could find plenty of fault. Risk profiling first – were you doing that to today’s standards – that’s something that NHFA were picked up on for example.

    We’re all in favour of tough regulation but none of us are in favour of retrospective and unfair regulation.

    Wake up and understand that there appear to be things going on behind the scenes here that stink.

    BTW I usually post on here with my real name but have chosen not to today because of the negative coverage this story is getting could impact on my current business.

  38. Is there anything else left to show why RDR and the banning of commission is needed now?

    I know NHFA advisers and can state that they were ethical and caring. However HSBC were not.

    Just look at the following statement by Brian Robertson:
    ““We have high values here at HSBC and this runs contrary to everything that we stand for. That is why when we suspected something was not right at NHFA, we took action. We advised the FSA of our findings and closed NHFA to new business on July 1, 2011.”

    What an absolute load of rubbish.
    NHFA advisers were on 35% (max) of the gross commission. How can that be a “high value” model? Advisers and clients were treated like dogs.

    Whether they were ethical or not, it meant they HAD TO SELL. When such poor terms are offered to staff they naturally have to make ends meet. Many of the people I know were on low earnings for doing tremendous amounts of work on behalf of their clients. However, the “good” performers were doing massive amounts of bonds with full upfront commissions.

    Get this – this is quality evidence that:

    1. Banks are NEVER to be trusted
    2. Commission does not work on a large scale

    Once RDR and the commission ban comes in, maybe you can create a proper unbiased profession with time.

  39. I think the way the post have gone on here, people seem to prefer the idea of law by lynch mob rather than some kind of rules.
    The NHFA advisers have (whilst understandably maintaining their anonnymity) put their case very well.
    The situation now calls for a fair trial and NOT a trial by the F-pack OR by IFAs who have NOT seen and case file of evidence.

  40. The artilce calls for more answers and for some evidence with names redacted;

    1. Can we see soem case files, good and bad with names redacted?
    2. What was the remuneration model of the advisers compared to the IFA firm and then compared to the bank AFTER sale.
    3. How many of the client contact staff had the full FPC.
    4. How many had the Diploma
    5. How many had the additional long term care qualification (I don’t)
    6. Who did the file checks
    7. What % wer checked regularly
    8. Who did the skilled persons assesment
    9. What was the remit of that assessment.
    10. Who did the due diligence at HSBC, BEFORE pirchase of the IFA practice?
    11. Did compliance from HSBC have someone with the LTC qual involved in the due diligence process?
    12. Who will actually pay the fine
    13.. Who is actually responible
    14. Are 12 and 13 above the same person/people
    15. If 12 are not, why is this fine being levied
    16. Whi is the winner in all this?

    Answers on a postcard and rearrange these letter ASF sesunob

  41. Michael Mason-Mahon 5th December 2011 at 6:58 pm

    Help Stop Bankers Cheating
    This fine is an obscene joke? If the FSA wanted to make an example of HSBC start the fine at £100 million (they can afford to pay this amount).
    FSA acting director of enforcement and financial crime Tracey McDermott says: This type of behaviour undermines confidence in the financial services sector.
    Yet in the next breath: HSBC, who owned NHFA, has now recognised the issues and taken steps to do the right thing. They have been given credit for that (IS THIS ANOTER OBSCENE JOKE?).

    The Chairman (Mr. Flint) states “maintaining our reputation and our integrity”
    “Everything we do is governed by the imperative of upholding HSBC’s corporate reputation and character at the highest level” (IS THIS ANOTER OBSCENE JOKE?).

    Mr. Flint is it true that the FSA is investigating you for giving false and misleading information to shareholders at this year’s AGM about complaints in India?

    HSBC chief executive Brian Robertson says: This should not have happened and I am profoundly sorry that it did. We have high values here at HSBC and this runs contrary to everything that we stand for (IS THIS ANOTER OBSCENE JOKE?).

    What about the USA and INDIA (ask them of your HIGH Values) What about the last time the FSA fined HSBC?

    What will HSBC HAVE TO PAY IN THE USA, for what they have been doing there? The Chairman (Mr. Flint) calls it a number of weaknesses.

  42. Hi Harry. I wouldn’t disagree with much in your post above.

  43. I’ve worked in financial services for the past 4 years, and to be honest, based on what I’ve witnessed, I wouldn’t trust any of you to give me directions to the nearest Macdonalds never mind advice on what to do with my money…..if only the general public knew what goes on behind the scenes!!!

  44. A read of the FSA Final Notice on this case tells you all you need to know. I have no doubt that competent and innocent advisers got caught up in this. However, the evidence of selling products that were unsuitable for the client (and vulnerable elderly clients at that) is pretty telling.

    HSBC owned this firm and they were clearly asleep on their watch which is why the Banking sector is getting a kicking in this thread.

    Ex-advisor 10.52pm

    Help us out here who did you work for in the financial services sector that has so damaged your trust?

  45. Mis-selling of products designed purely to make money for the issuing bank – without the clients interests at heart, has been rife in recent years. So called 100% principal protected products which subsequently failed are another example, where many clients still fight for repayment of their capital. Whilst regulators are at least now actively tackling this issue, much remains to be done to change this entrenched culture of aggressive profiteering at any cost – with more historic redress required to corect the failures of the past…

  46. It is quite clear that fines alone will not solve the problems that face financial services; after all we seem to lurch from one crisis to another either because of commission or the bonus culture that crates greed within our industry.

    If the rewards within financial services are so lucrative than the penalties also need to be equally stringent if it is proven that individuals are at fault. It is clear that group responsibility has not worked and until we make individuals responsible for their actions organisations will never change.

    I wonder if the advisers and directors of this company will be so flippant with other people’s money, if they knew that there was a possible jail sentence awaiting or unlimited personal fines.

    I know that some people posting on this site will probably say be careful what you wish for, but I’d rather see that type of regulator then the one we’ve had recently.

    I think it’s about time that we started building the financial services industry based on morals and responsibility rather than the greed and short termism that we have had for so many years.

  47. I’ve just read the final notice issued by the FSA link below:

    http://www.fsa.gov.uk/pubs/final/hsbc_2dec11.pdf

    Interesting read!!!!

  48. Who knows what the real story is here, NHFA seem to have been censured largely for failures in process, particularly with ATR and Investment Bonds with death penalties – although why anyone would think this was suitable for an nonagenarian is beyond me!

    The reality is that ATR was given scant consideration by most advisers for most of the history of financial advice, and it is really only over the last five or six years that it has been subject to proper consideration. Also, taking full upfront commission may be considered unethical today, but not too long ago it was pretty much normal practice – I’m sure the more sanctimonious of my peers are apoplectic at these statements, but they’re true.

    The world evolves, and ethics change, and righteousness is easy in retrospect.

    Squabbling amongst ourselves is not helpful, and retrospective regulation is a danger for us all.

  49. The Banks’ financial advisers are given a daily target which has to be met. Little wonder that so much mis-selling goes on. I met with a client who had been sold a 10 year bond by a major high street bank. She was 88 years old!

  50. Hayden

    Would agree ATR has become big over the last 5 to 7 years.

    The period that this report looks into is 2005 to 2010 not 20 years ago. That to me is advice given under today rules.

  51. Peter…

    Just had a quick look at the FSA link – hmmm, it does all look like the checks and balances within the organisation were a bit lax and that a lot of the advice was ill considered and inappropriate. It’s impossible to argue with the third party assessment in section 4.20.

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