HSBC has made the headlines recently, having been punished with a record fine for advice provided to elderly customers. The shocking details of the practices within a division of HSBC have rightly been picked up by the national newspapers.
However, there does seem to be a pattern to the news releases from the Financial Services Authority (FSA) and reports from consumer group Which? throughout the year.
18 January 2011: The Financial Services Authority (FSA) has fined Barclays Bank plc (Barclays) £7.7 million for failures in relation to the sale of two funds. Barclays will contact customers and pay redress where appropriate.
25 May 2011: The Financial Services Authority (FSA) has fined Bank of Scotland (BOS) £3.5 million for the mishandling of complaints about retail investment products - many from older customers with little or no experience of investment products.
20 November 2011: A new report from the consumer group, Which?, has criticised banks and building societies for giving poor financial advice to 32 out of its 37 mystery shoppers. The report also concluded that financial advice should be sought from an Independent Financial Adviser (IFA). Both the Yorkshire Bank and Clydesdale failed on all of the four visits made to their branches, the Co-Operative and Britannia were not much better failing three out of four visits. There was also a pattern of the advisers at these banks, who were all tied to AXA, recommending Investment Bonds rather than potentially more tax efficient ISAs (Individual Savings Accounts). The advice was also marketed as ‘free' despite a commission of 8.8% being paid if the investment had proceeded. A number of other banks and building societies, including Skipton Building Society, Royal Bank of Scotland and Lloyds, also failed to give good advice on all four occasions they were tested.
5 December 2011: The Financial Services Authority (FSA) has issued its largest ever retail fine of £10.5 million to HSBC because of inappropriate investment advice provided by one of its subsidiaries, NHFA Limited (NHFA) to elderly customers. HSBC estimates that the amount of compensation to be paid to NHFA customers will be approximately £29.3 million in addition to the fine.
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