HSBC Group was fined 10.5 million pounds ($16.4 million) by the financial authority in the UK, because it sold old people financial products that in many cases were lasting beyond their life expectancy, according to CNBC. This is the largest fine of a financial institution in the UK for violation of regulations. HSBC will most probably pay a 29.3 million pounds ($45.8 million) compensation for “most vulnerable” old clients, who received inappropriate advice from NHFA, a subsidiary of the group, according to the Financial Services Authority. Advice received by the elderly was considered inappropriate because, in many cases, their life expectancy was lower than the recommended five-year investment.
The average age of NHFA clients is 83
“Elderly customers of NHFA have trusted the company. NHFA deceived their confidence by selling them inappropriate products. This type of behavior undermines confidence in the financial services sector”, said the Director of the Financial Services Authority, Tracey McDermott. According to the UK authorities, 2,485 customers were advised to invest in such products, and for 87% of them, these financial instruments were inadequate. A total of about 285 million pounds was invested in five years and the average investment stood at 115,000 pounds.
The fine was announced in a period of low confidence of population in banks following the financial crisis, when many credit institutions have been saved by the government with taxpayer money.