NHFA - are you affected?

09/12/2011

NHFA, a company owned by the banking giant HSBC has recently been fined a massive £10.5m by City watchdog The FSA for the mis-selling of investment bonds to vunerable elderly people either already in or about to enter care.  And in a further twist, the bank has recently announced that it will move quickly and swiftly to compensate all those involved – an action that could cost it and its shareholders up to £40m.

 

The company specialised in selling products that would fund the cost of care in later life and it is believed that around 2,500 individual customers are affected by the scandal.  The FSA found, during its investigations, that some 87% of NHFA customers were sold these products which were deemed unsuitable for their needs and as a result, the fine handed down is the largest ever retail fine made by the FSA..  It is estimated that compensation for the mis-selling will exceed £29m taking the total bill for HSBC shareholders to the £40m mentioned above.

 

The average age of an NHFA customer was found to be 83 and the investment mis-selling took place between 2005 and 2010.  In almost all cases these investments were sold to vunerable elderly people either already in care or about to enter long term care and as a result the scandal is bound to be profoundly embarrassing to the bank.  The average investment was believed to be around £115,000 and it is estimated that some £285m of these care plans were sold.  

 

To be fair to the bank it did identify the potential mis-selling problems and notified the FSA of this – it also stopped writing new business with effect from July of this year.  It has also pledged to fully compensate all those involved, including those that were potentially mis-sold these investments before the bank bought NHFA in 2005.

 

If you are a customer of NHFA or feel you are affected in any way by this issue then you can make contact with the bank by email at NHFA@hsbc.com, or write to NHFA, HSBC Bank Plc, PO Box 1888, Coventry, CV3 9WN.