HSBC has been handed a bill of nearly £40m by the Financial Services Authority for advising elderly clients in care to invest in bonds.
In total 2,485 customers were affected, they were advised by HSBC subsidiary NHFA to invest in order to pay care fees.
They have been fined £10m and will have to pay a further £29.3m in compensation to those clients affected.
Age
The reason the fine is so large is because the average age of the clients was 83 and they were in or entering long term care.
The average size of the investments was £115,000 and the money was to be used to fund their care fees.
When investing, the usual rule of thumb is that the time frame should be no less than five years, due to the age of the clients involved often they lived for less than five years.
NHFA
At one time NHFA was the leading provider of advice in the long term care market.
HSBC said that it realised there problems at NHFA and closed it earlier this year.
Clients affected will be contacted in the coming weeks to offered compensation. If the client has since died HSBC will be contacting families or those who inherited the estate.
Advice
If you or a relative require advice on how to pay for long term care fees always make sure you seek advice from an independent financial adviser who holds the required qualifications.
